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Enter Symbol
or Name
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CA



Alexco Resource Corp
Symbol AXR
Shares Issued 91,660,372
Close 2016-11-09 C$ 2.43
Market Cap C$ 222,734,704
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Alexco Resource loses $640,000 in Q3

2016-11-09 18:28 ET - News Release

Mr. Clynton Nauman reports

ALEXCO REPORTS THIRD QUARTER 2016 RESULTS

Alexco Resource Corp. is releasing its financial results for the quarter ended Sept. 30, 2016. All figures are expressed in Canadian dollars unless otherwise stated. For the third quarter of 2016, Alexco recorded a net loss of $640,000 or one cent per share, including $900,000 in depreciation expense, share-based compensation expense and an unrealized loss on warrants held, offset by a realized gain of $1.3-million on the disposal of shares held as an investment. Alexco Environmental Group (AEG), a wholly owned subsidiary of Alexco, recognized revenues of $3.2-million during the third quarter of 2016, with a gross profit of $700,000, achieving a gross margin of 22 per cent.

Third quarter highlights:

  • Improving and strong unrestricted cash position with cash and cash equivalents at Sept. 30, 2016, of $23.0-million, and net working capital of $25.0-million, compared with $8.2-million and $12.6-million, respectively, at Dec. 31, 2015;
  • At the end of October, completed its 2016 Bermingham diamond drill program, with 50 holes for a total of 17,300 metres. Interim drill results released on Sept. 13, 2016, outlined a zone of high-grade mineralization beginning approximately 150 metres from surface and extending downplunge approximately 250 metres, including an intercept of 7.5 metres (true width) of 2,715 grams per tonne (g/t) (87.3 ounces per ton) silver (including 2.4 metres (true width) of 6,391 g/t (205.5 ounces per ton) silver within the zone of downplunge extension. Final results from the Bermingham program are expected to be available in the fourth quarter;
  • 3,267,075 warrants exercised for proceeds of $4.6-million;
  • The company sold investments in marketable securities for proceeds of $1.5-million for a gain of $1.3-million;
  • A performance bond was released to Alexco in the amount of $3.8-million ($2.9-million (U.S.)) related to the AEG's Globeville smelter project in Denver, Colo.;
  • As of Sept. 30, 2016, the company has spent all of the $3,001,125 flow-through funds raised.

Alexco's president and chief executive officer, Clynt Nauman, said: "In the third quarter, following the release of encouraging interim results in September, we expanded our Bermingham surface drill program from 8,000 to 17,000 metres. Elsewhere at Keno Hill, we continued with a mill assessment and maintenance program, and installation of the Flame & Moth underground portal, and drove the first 20 metres of the production ramp. Pending the final results of the Bermingham drill program, release of an updated preliminary economic assessment and continued strength in the silver market, we will be well positioned by year-end to consider redevelopment at Keno Hill."

                            SUMMARY FINANCIAL RESULTS AND INFORMATION
                 (expressed in thousands of dollars, except per-share amounts)

                                                        Three months ended Sept. 30,      Nine months ended Sept. 30,
                                                              2016             2015            2016             2015

Environmental services revenue                            $  3,243         $  3,408        $  8,422          $ 10,534
Gross profit from environmental services                       710              869           1,985             2,640
(Loss) before taxes                                           (246)          (1,986)         (2,388)           (4,851)
Net (loss)                                                    (640)          (1,649)         (2,598)           (4,007)
Total comprehensive (loss)                                  (1,819)          (1,834)         (2,218)           (4,498)
(Loss) per share, basic and diluted                       $  (0.01)        $  (0.02)       $  (0.03)         $  (0.06)
Cash flows consumed from operating activities                 (492)          (1,483)         (3,452)           (3,486)

Keno Hill exploration

The company has completed an exploration program of 50 drill holes totalling 17,300 metres of surface diamond drilling to follow up on prior identification of high-grade silver results at the Bermingham prospect. Approximately $3.3-million was invested in the expanded exploration program, the majority financed by way of a $3-million flow-through financing in December, 2015. The surface drilling program, initiated with two drills and later expanded to three diamond drills, commenced in June and was completed in late October. The company is expending additional funds to gather important geotechnical and hydrogeological information, as well as undertaking a preliminary metallurgical program to test the Bermingham mineralization. Interim drill results on 18 drill holes were released on Sept. 13, 2016 (see the Sept. 13, 2016, news release entitled, "Alexco Confirms, Expands High Grade Silver Zone at Bermingham Deposit; Drilling Continues"), and final results are expected to be available in the fourth quarter.

Initial assay results confirmed and expanded the Bermingham high-grade zone (the Bear zone), including a recent intercept of 7.5 metres (true width) of 2,715 g/t (87.3 ounces per ton) silver (including 2.4 metres (true width) of 6,391 g/t (205.5 ounces per ton) silver) from hole K-16-0608, drilled approximately 100 metres downplunge from the deepest intercept reported in 2015. Over all, all other composite intercepts in the high-grade Bear zone now range between 504 g/t and 7,462 g/t silver over composited true thicknesses ranging from 1.3 metres to 6.4 metres.

The drill objectives at Bermingham were firstly to increase confidence, most notably to infill and expand the previously identified zone of high-grade silver intercepts on the Bear vein with sufficient density to permit resource estimation, and, secondly, to explore up and downplunge of the high-grade zone for possible extensions to other favourable structural and stratigraphic positions in which additional mineral deposition may have occurred.

Keno Hill silver district (KHSD), PEA

The company plans to provide an updated National Instrument 43-101-compliant preliminary economic assessment (PEA) for its 100-per-cent-owned KHSD in the fourth quarter of 2016, which will incorporate the re-engineering and optimization of the mine plan, along with an updated mineral resource estimate for the Bermingham deposit.

The company expects a water use licence amendment hearing to occur in the first quarter of 2017, which is the final remaining permit required to commence mining operations at the Flame & Moth deposit.

Keno Hill development update

The company continued with mill assessment and maintenance programs during the quarter. Mechanical assessment and maintenance of equipment are part of the routine process of maintaining the crushing and milling equipment assets in a condition where resumption of processing operations can be initiated if warranted.

In October, the company completed installation of the underground portal and infrastructure at the Flame & Moth deposit and drove the first 20 metres of the production ramp. This will allow resumption of development activities to begin at full scale in the future. This ramp will ultimately be driven to the upper production levels of the Flame & Moth silver deposit.

As a result of the company filing an updated reclamation and closure plan for its current operations and the future development of the Flame & Moth deposit, the quartz mining licence (QML) required that Alexco increase its posted security from $4.2-million to $6.3-million. On July 26, 2016, the corporation posted the additional $2.1-million in cash for security and is currently working with the Yukon government to substitute a portion of the cash posted in exchange for a pledge of assets.

Alexco Environmental Group

AEG recorded revenues of $3.2-million and a gross profit of $700,000, compared with revenue of $3.4-million and a gross profit of $900,000 in the third quarter of 2016. The decrease in gross profit from the prior period is mainly attributed to unanticipated project related costs in the United States, as well as costs associated with obtaining the release of the Globeville smelter project performance bond.

At the Gold King project in southern Colorado, the U.S. Environmental Protection Agency authorized an expansion of the plant to approximately double the treatment capacity of the interim water treatment plant. Construction related to this and further upgrades are currently under way.

On the Globeville smelter project, a completion report, which documents the work completed at the site and the monitoring results, was submitted to the State of Colorado in July. The completion report triggered the release of $3.8-million to AEG, with the remaining $500,000 to stay in the performance bond for approximately two years.

Financial

Alexco's cash and cash equivalents at Sept. 30, 2016, totalled $23.0-million, compared with $8.2-million at Dec. 31, 2015, while net working capital totalled $25.0-million, compared with $12.6-million for the same dates. With its cash resources and net working capital on hand at Sept. 30, 2016, Alexco anticipates it will have sufficient capital resources to carry out all of its currently anticipated exploration programs, environmental services business, and corporate offices and administration, as planned for 2016 and 2017.

Financial report and conference call for the third quarter of 2016

Full details of the financial and operating results for the second quarter ended Sept. 30, 2016, are described in Alexco's interim condensed consolidated financial statements, with accompanying notes, and the related management's discussion and analysis (MD&A). These documents and additional information on Alexco, including its annual information form, are available on the company's website, and on SEDAR and 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 Thursday, Nov. 10, 2016. To participate in the live call, please use one of the following methods:

Dial toll-free from Canada or the U.S.:  1-866-233-4606

Dial from outside Canada or the U.S.:  1-416-640-5946

Passcode:  conference ID No. 1253898

Live audio webcast:  at the company's 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 Nov. 24, 2016, a replay of the call will be available by telephone at the following numbers.

Dial toll-free from Canada or the U.S.:  1-888-203-1112

Dial from outside Canada or the U.S.:  1-647-436-0148

Replay passcodes:  conference ID No. 1253898

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.

About Alexco

Alexco owns substantially all of the historical Keno Hill silver district, located in Canada's Yukon Territory, including the Bellekeno silver mine, the Flame & Moth, Lucky Queen, Bermingham and Onek deposits, and other historic and surface resources within the district. Bellekeno, which commenced commercial production at the beginning of calendar year 2011, was Canada's only operating primary silver mine from 2011 to 2013. Alexco is currently undergoing an interim suspension of operations at Keno Hill in order to decrease costs and reposition the district for long-term, sustainable operations.

We seek Safe Harbor.

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