04:21:01 EDT Fri 29 Mar 2024
Enter Symbol
or Name
USA
CA



Alexco Resource Corp
Symbol AXR
Shares Issued 69,588,898
Close 2014-11-13 C$ 0.56
Market Cap C$ 38,969,783
Recent Sedar Documents

Alexco loses $667,000 in Q3

2014-11-13 17:03 ET - News Release

Mr. Clynton Nauman reports

ALEXCO REPORTS THIRD QUARTER 2014 FINANCIAL RESULTS

Alexco Resource Corp. has released its financial results for the third quarter of 2014. (All figures are expressed in Canadian dollars unless otherwise stated.)

Third quarter highlights:

  • Net loss was $700,000, or one cent per share. Loss before deferred taxes was $800,000, including non-cash costs of $700,000 for depreciation and $200,000 for share-based compensation.
  • Cash and cash equivalents at Sept. 30, 2014, were $10.6-million, and net working capital was $18.0-million.
  • Alexco Environmental Group recorded revenues of $4,651,000 in the third quarter of 2014 for a gross profit of $1,835,000 and a gross margin of 39.5 per cent.
  • The company completed a bought-deal financing in August, 2014, for net cash proceeds of $7.2-million.
  • The date by which the company can make a $20-million (U.S.) payment to Silver Wheaton Corp. has been extended by one year to Dec. 31, 2015, should Alexco elect to implement the previously announced amendment to its silver streaming agreement. Also extended is the date for completion of the 400-tonne-per-day-throughput test to Dec. 31, 2016.
  • The company made progress in the permitting process relating to potential development and production from the Flame & Moth deposit. A decision document has been issued by the government of Yukon, which is a necessary step toward amending the quartz mining licence and the water use licence.
  • Alexco drilled its best hole ever at Keno Hill, intersecting 5,667 grams per tonne silver over 6.39 metres (true width) at Bermingham. Surface exploration drilling for the full 2014 season was completed as of the end of October, and totalled 18,267 metres.

Alexco's president and chief operating officer, Clynt Nauman, said: "We achieved a significant number of goals during the quarter, including an amendment to our silver streaming agreement, successful completion of an environmental assessment and subsequent receipt of the decision document for Flame & Moth operations, and concluded another extremely successful annual exploration program. In addition, we completed a financing to bolster our treasury in the face of a lengthy unfavourable silver price environment. Furthermore, Alexco Environmental Group turned in another solid quarter with cash flow continuing to significantly offset overhead costs throughout the corporate group. Taken as a whole, Alexco has been able to maintain considerable operating flexibility in the face of headwinds in the precious metals sector. Still outstanding are exploration results for approximately 12,000 metres of extension and infill drilling around the Flame & Moth deposit. I anticipate that these additional results will help us identify further capital and operating cost-efficiencies as we move forward with our decisions and plans at Keno Hill."

                SUMMARY FINANCIAL RESULTS AND INFORMATION
     (expressed in thousands of dollars, except per-share amounts) 
                                                  
                                    Three months ended    Nine months ended   
                                          Sept. 30,            Sept. 30,
                                      2014        2013      2014       2013 
Revenue from environmental                                                  
services                            $4,651      $6,356   $10,786    $11,821 
Gross profit from environmental                                             
services                             1,835       4,189     3,628      6,431 
Revenue from mining operations          --      17,038       361     42,449 
Gross profit (loss) from mining                                             
operations                              --       2,102       361       (229)
Revenue from all operations          4,651      23,394    11,147     54,270 
Gross profit (loss) from all                                                
operations                           1,835       6,291     3,989      6,202 
Income (loss) before taxes            (827)      3,080    (4,495)   (61,574)
Net income (loss)                     (667)      2,219    (3,747)   (49,319)
Adjusted net income (loss)            (667)      2,219    (3,747)    (3,182)
Total comprehensive income                                                  
(loss)                                (568)      2,181    (3,461)   (49,466)
Earnings (loss) per share --                                                 
basic and diluted                $   (0.01) $     0.04 $   (0.06) $   (0.82)

Bought-deal financing

In August, 2014, Alexco completed a bought-deal financing pursuant to a short-form prospectus, issuing 7,015,000 units at a price of $1.15 per unit for gross proceeds of $8,067,250. Each unit was composed of one common share and one-half of one common share purchase warrant, each full warrant entitling the holder to acquire one additional common share at a price of $1.40 for a period of two years after the closing date. The net cash proceeds from this financing were $7,228,000, and are expected to be used to further exploration and development activities on the Eastern Keno Hill silver district property, particularly the Flame & Moth deposit, and for general working capital purposes.

Extension of payment date for silver streaming amendment

In June, Alexco announced it had come to an agreement with Silver Wheaton to amend the silver streaming agreement originally dated Oct. 2, 2008, such that the fixed $3.90-(U.S.)-per-ounce silver streaming production payment is replaced with a variable production payment based on the spot price of silver, with significant positive implications for Alexco and the Keno Hill silver district in general (see news release dated June 16, 2014, entitled, "Alexco announces amended silver streaming agreement for Keno Hill"). The amendment is subject to the payment of $20-million (U.S.) by Alexco to Silver Wheaton, and the date by which the payment is to be made was originally set at Dec. 31, 2014. That date has now been extended one year by agreement of the parties to Dec. 31, 2015 (see news release dated Nov. 3, 2014, entitled, "Alexco announces one-year extension of silver stream amendment buydown date"). If Alexco does not make the $20-million (U.S.) payment, the original silver streaming agreement terms will continue unamended with no other impact to Alexco. Also extended is the date for completion of the 400-tonne-per-day-throughput test to Dec. 31, 2016.

Permitting

Future development and production from the Flame & Moth deposit require Alexco to undertake an environmental reassessment under the Yukon Environmental and Socio-economic Assessment Act, and seek additional amendments to its existing quartz mining licence and water use licence. This process was initiated in December, 2013. In October, 2014, the designated office evaluation report under the Yukon Environmental and Socio-economic Assessment Board recommended that the Flame & Moth project be allowed to proceed under certain terms and conditions, which were subsequently accepted, modified or rejected by the decision body (Yukon government) in the decision document received by the company on Nov. 4, 2014. The decision document outlines the terms and conditions for modification of the existing QML, and opens the way for initial development of the Flame & Moth deposit. Conditions outlined in the decision document will be incorporated in the QML. Subsequent to the QML, the company also needs to complete a process to amend its WUL to incorporate conditions related to future production and milling from Flame & Moth. It is anticipated that a further six to 10 months are required to amend the WUL, a process which was initiated in October, 2014.

Alexco Environmental Group

Alexco Environmental Group recorded revenues of $4,651,000 in the third quarter of 2014 for a gross profit of $1,835,000 and a gross margin of 39.5 per cent. In the third quarter of 2013, the recognized revenues totalled $6,356,000 for a gross profit of $4,189,000. In July, 2013, an amended and restated subsidiary agreement was executed with the government of Canada. As a result of that execution, included in revenues for that quarter was an amount of $1.5-million in retroactive fees, and included in cost of sales was an $850,000 reduction in the corporation's environmental services contract loss provision. Excluding the impacts from the execution of the ARSA, in the third quarter of 2013, AEG achieved a gross margin of 37.9 per cent.

Keno Hill exploration

Alexco's surface exploration plans for 2014 are currently budgeted at approximately $5-million, of which approximately $4,168,000 has been incurred through Sept. 30, 2014. Through a combination of increased efficiency and renegotiated contract prices, the company drilled 80-per-cent-more metres than initially anticipated, completing 18,267 metres by the end of the season in late October. Approximately 16,180 metres were drilled through Sept. 30, 2014.

Initial results from the 2014 program were reported in early November (see news release dated Nov. 5, 2014, entitled, "Alexco drills best hole ever: intersects 5,667 grams per tonne silver over 6.39 metres (true width) at Bermingham; mineralization extended and remains open"), with respect to 2,667 metres of drilling completed in eight holes to both infill and extend Bermingham mineralization to the northeast, toward the historical Hector-Calumet mine. Results from this drilling include drill hole K-14-0537, which intercepted 6.39 metres (true width) with a composite silver grade of 5,667 grams per tonne silver (165.3 ounces per ton), which included 1.81 metres (true width) assaying 18,270 grams per tonne (532.9 ounces per ton) silver. Additionally, three other holes within 200 metres of drill hole K-14-0537 intercepted between 529 grams per tonne and 714 grams per tonne silver over true widths ranging from 3.03 metres to 7.97 metres. A new resource estimate for Bermingham is expected to be completed in early 2015.

Further results from the 2014 exploration program are expected to be released as they become available over the course of winter, with the balance of the program having been focused primarily on the Flame & Moth deposit area.

Financial position

Alexco's cash and cash equivalents at Sept. 30, 2014, totalled $10.6-million, compared with $6.3-million at June 30, 2014, and $8.6-million at Dec. 31, 2013, while net working capital at Sept. 30, 2014, totalled $18.0-million compared with $11.7-million and $15.3-million for the same dates, respectively. The decline in the quarter, after allowing for the August financing, was due primarily to expenditures on exploration activity, with roughly half of corporate general and administrative and mine site care and maintenance costs offset by cash generated from AEG operating activities.

Management change

Alexco is pleased to announce that Michael Clark has agreed to join the company, effective Dec. 15, 2014, in the role of chief financial officer. Mr. Clark is a chartered accountant with over 11 years of experience, including seven years in senior financial roles within the junior mining sector. Alexco's current chief financial officer, David Whittle, had recently advised of his intention to step down in December for personal and family reasons, after assisting with the CFO transition.

Mr. Nauman said, "We sincerely appreciate David's outstanding contributions and dedication over the past seven years and wish him all the best in his future endeavours."

Financial report and conference call for third quarter 2014

Full details of the financial and operating results for the third quarter of 2014 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 are available on the company's website, on SEDAR and on EDGAR.

Alexco is holding an audio webcast conference call to discuss these results at 11 a.m. Eastern Time (8 a.m. Pacific Time) on Nov. 14, 2014. To participate in the live call, please use one of the following methods:

Dial toll-free from Canada or the United States:  1-877-407-8031

Dial from outside Canada or the U.S.:  1-201-689-8031

Live audio webcast:  Alexco Resource website

Participants should connect five to 10 minutes before the call.

The conference call will be recorded, and an archived audio webcast will be available at the company's website. Through Dec. 14, 2014, a replay of the call will be available by telephone at the following:

Dial toll-free from Canada or the United States:  1-877-660-6853

Dial from outside Canada or the U.S.:  1-201-612-7415

Replay passcode:  Conference ID 13595099

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, PEng, former Bellekeno mine manager, both of whom are qualified persons as defined by National Instrument 43-101 (standards of disclosure for mineral projects).

Keno Hill silver district history

Between 1921 and 1988, the Keno Hill silver district was a world-class silver producer, with more than 217 million ounces of silver produced at average grades of 40.5 ounces per ton silver, 5.6 per cent lead and 3.1 per cent zinc (Yukon government's Minfile database). These historical production grades would rank Keno Hill in the top 3 per cent by grade of today's global silver producers.

We seek Safe Harbor.

© 2024 Canjex Publishing Ltd. All rights reserved.