(All amounts in CDN$ unless otherwise
indicated)
VANCOUVER, BC, Aug. 11,
2022 /PRNewswire/ - 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, 2022
("Q1 2022" and "YTD 2022") compared to the three
and six month periods ended June 30,
2021 ("Q2 2021" and "YTD 2021").
Acquisition by Hecla Mining Company
- On July 4, 2022, the Company
entered into a definitive agreement with Hecla Mining Company
("Hecla"), as assigned and
amended (the "Arrangement Agreement"), pursuant to which
1080980 B.C. Ltd. ("108"), a
subsidiary of Hecla, will acquire
all of the outstanding common shares of Alexco that 108 does not
already own (the "Arrangement"). Each outstanding common
share of Alexco will be exchanged for 0.116 of a share of
Hecla common stock. The
acquisition is subject to approvals by Alexco securityholders, as
well as applicable regulatory approvals and the satisfaction or
waiver of customary closing conditions. The board of directors of
Alexco and Hecla have both
unanimously approved the transaction.
Corporate
- The Company reported revenues of $3,952,000 for Q2 2022 compared to $7,939,000 for Q2 2021. Mining operations
revenue, net of streaming payments related to the Wheaton Precious
Metals Corp. ("Wheaton") silver purchase agreement
("SPA"), in Q2 2022 was $3,528,000 and was derived from concentrate sales
from ore sourced from the Bermingham and Flame & Moth mines. In
Q2 2022, the Company also recognized reclamation management revenue
of $424,000.
- The Company recorded a write-down of mineral properties, plant
and equipment of $97,048,000 during
Q2 2022. As at June 30, 2022,
indicators of impairment were identified, and the carrying value of
the Keno Hill cash generating unit ("Keno Hill CGU") was
compared with its recoverable amount. The recoverable amount of the
Keno Hill CGU was determined by management based on the fair value
less costs of disposal ("FVLCD") method using the implied
value of Alexco based on the agreed transaction value with
Hecla. Management assessed that
the Keno Hill CGU carrying value exceeded its FVLCD and a
write-down of mineral properties, plant and equipment was
recognized.
- The Company reported a net loss of $95,062,000 for Q2 2022 which was primarily
attributable to a write-down of mineral properties, plant and
equipment and a gross loss from mining operations, partially offset
by a gain on sale of mineral property rights related to the
McQuesten mineral property and a fair value gain on the embedded
derivative asset related to the Wheaton SPA. A net loss of
$2,748,000 for Q2 2021 was primarily
from ramp-up related costs at Keno Hill and general and
administrative costs.
- The Company reported an adjusted net loss of $4,269,000 for Q2 2022 compared to $2,548,000 for Q2 2021. The adjusted net loss
excludes the amounts recorded with respect to the fair value
adjustment on the embedded derivative asset related to the Wheaton
SPA and the non-cash write-down of mineral properties, plant and
equipment (see "Non-GAAP Measures" in the MD&A for the three
and six month periods ended June 30,
2022).
- The Company reported an operating loss of $105,662,000 for Q2 2022 compared to $2,489,000 for Q2 2021. The operating loss for Q2
2022 was related to a write-down of mineral properties, plant and
equipment and a gross loss from mining operations.
- The Company's cash and cash equivalents as at June 30, 2022 totaled $8,901,000 compared to $9,933,000 as at December
31, 2021, while net working capital totaled $(6,368,000) compared to $1,389,000 as at December
31, 2021 (see "Non-GAAP Measures" in the MD&A for the
three and six month periods ended June 30,
2022). The Company's restricted cash and deposits as at
June 30, 2022 totaled $2,998,000 compared to $2,990,000 as at December
31, 2021.
Mine Operations and Exploration
- During the quarter, ramp-up of mining activity at Keno Hill
continued to progress with underground development performance
aided by improved equipment availability (versus Q1 2022) at both
the Flame & Moth and Bermingham mines. Similarly, the District
Mill saw improved throughput and metallurgical performance in the
same period. Underground advance at Bermingham reached the 1120
level, where the upper portion of the high-grade Bear Zone has been
cross-cut with two ore faces and predictive block model grades of
1,900 – 2,000 grams per tonne silver appear to be well supported or
exceeded in mine based rib and face assays.
- While the underground performance improvements were notable,
and the demonstrated supply of 150-250 tonnes per day of ore to the
mill has been important, the rate of improvement in the advance of
underground development remained insufficient to achieve the
necessary number of production headings to sustain 400 tonnes per
day feed to the mill before the end of 2022. To rectify this
imbalance, in June, the Company elected to temporarily suspend
milling operations to focus all efforts on advancing underground
development, which saw a combined total of 150 meters of
underground development in the Bermingham and Flame & Moth
mines in the month of July.
- Surface exploration began with two drills in May with focus in
the vicinity of the historic Silver King mine and the Coral Wigwam
area, approximately 800 meters along structural trend from the
Bermingham Mine. Early indications from shallow geology-defining
drill holes in the Coral Wigwam area have identified a structural
geology framework potentially similar to that which exists in the
area of the Bermingham deposit.
Other Activities
- On April 13, 2022, the Company
completed a non-brokered private placement offering with an
affiliate of Hecla for 7,473,495
common shares at a price of $1.75 per
share, resulting in gross proceeds of $13,078,616.
- On April 28, 2022, the Company
received a further prepayment of US$5,000,000 under the unsecured revolving credit
facility (the "Facility") with its offtaker. During Q2 2022, the
Company repaid US$2,500,000 plus
applicable interest and standby fees. Subsequent to period end, the
Company repaid the entire outstanding balance of the Facility.
- On April 29, 2022, the Company
sold to Victoria Gold Corp. ("Victoria") all of its rights,
benefits and interests in and to the remaining option consideration
payable to Alexco by Banyan Gold Corp. ("Banyan") under the option
agreement with Banyan in exchange for 447,142 shares of Victoria.
On May 4, 2022, the Victoria shares were sold for net proceeds of
$6,000,000 after selling costs and
commissions.
Key Performance Metrics
Operations
|
Q2
2022
|
Q1
2022
|
YTD
2022
|
Ore tonnes
mined
|
10,910
|
8,092
|
19,002
|
Ore tonnes
milled
|
12,318
|
7,609
|
19,927
|
Mill throughput (tonnes
per operating day)1
|
397
|
317
|
362
|
Ore tonnes
stockpiled
|
0
|
1,849
|
0
|
Underground development
meters
|
302
|
81
|
383
|
|
|
|
|
Head
grade
|
|
|
|
Silver (grams per
tonne ("g/t"))
|
515
|
357
|
454
|
Lead
|
1.4 %
|
1.1 %
|
1.3 %
|
Zinc
|
2.6 %
|
2.4 %
|
2.5 %
|
|
|
|
|
Recoveries
|
|
|
|
Silver
|
94 %
|
93 %
|
94 %
|
Lead in lead
concentrate
|
81 %
|
87 %
|
83 %
|
Zinc in zinc
concentrate
|
74 %
|
63 %
|
70 %
|
|
|
|
|
Concentrate
production and grades
|
|
|
|
Lead concentrate
produced (tonnes)
|
351
|
227
|
578
|
Silver grade
(g/t)
|
15,817
|
10,369
|
13,681
|
Lead grade
|
40 %
|
33 %
|
38 %
|
Zinc concentrate
produced (tonnes)
|
499
|
247
|
746
|
Silver grade
(g/t)
|
760
|
774
|
765
|
Zinc grade
|
48 %
|
47 %
|
48 %
|
|
|
|
|
Contained metal in
concentrate produced
|
|
|
|
Silver
(ounces)
|
190,930
|
81,725
|
272,655
|
Lead
(pounds)
|
312,778
|
165,086
|
477,864
|
Zinc
(pounds)
|
532,200
|
255,515
|
787,715
|
|
|
|
|
Financials
(expressed in
thousands of Canadian dollars, except per share
amounts)
|
Q2
2022
|
Q1
2022
|
YTD
2022
|
Revenues – Mining
operations
|
3,528
|
2,052
|
5,580
|
Revenues – Reclamation
management
|
424
|
744
|
1,168
|
Operating
Loss
|
(105,662)
|
(6,251)
|
(111,913)
|
Adjusted Loss Before
Taxes2
|
(4,576)
|
(6,140)
|
(10,716)
|
Cash and cash
equivalents
|
8,901
|
5,637
|
8,901
|
Net Working
Capital2
|
(6,368)
|
(7,070)
|
(6,368)
|
Adjusted Net
Loss2
|
(4,269)
|
(5,702)
|
(9,971)
|
Net Loss
|
(95,062)
|
(11,314)
|
(106,376)
|
|
|
|
|
Shareholders
|
|
|
|
Basic and diluted net
income (loss) per common share
|
(0.59)
|
(0.07)
|
(0.67)
|
Adjusted basic and
diluted loss per common share2
|
(0.03)
|
(0.04)
|
(0.06)
|
|
|
|
|
Total
assets3
|
132,206
|
212,461
|
132,206
|
Total non-current
liabilities
|
6,399
|
6,559
|
6,399
|
1.
|
Mill throughput
(tonnes per operating day) is based on the number of days that the
mill was operational during the period. The mill was operational
for 31 days and 62 days during Q2 2022 and Q2 2021 and for 55 days
and 98 days during YTD 2022 and YTD 2021,
respectively.
|
2.
|
See "Non-GAAP
Measures" in the MD&A for the three and six month periods ended
June 30, 2022.
|
3.
|
Total assets
decreased primarily due to a write-down of mineral properties,
plant and equipment
|
4.
|
Sum of quarters may
not add up to the yearly totals due to rounding.
|
Qualified Persons
The disclosure in this news release of scientific and technical
information has been reviewed and approved Sebastien D. Tolgyesi, P.Eng., P.Geo., Keno Hill
Operations Manager, who is a Qualified Persons as defined by
National Instrument 43-101 – Standards of Disclosure for
Mineral Projects.
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 mines in the world. Alexco started concentrate production
and shipments in 2021 and is currently advancing Keno Hill toward
steady state production. Upon reaching commercial production, Keno
Hill is expected to produce an average of approximately 4.4 million
ounces of silver per year contained in high quality lead/silver and
zinc concentrates. Keno Hill retains significant potential to grow
and Alexco has a long history of expanding the operation's mineral
resources through successful exploration.
Contact
Forward-Looking Statements
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 consummation and timing
of the Arrangement, approval of the Arrangement by securityholders,
the satisfaction of the conditions precedent to the Arrangement,
timing, receipt and anticipated effects of court, regulatory and
other consents and approvals, statements with respect to the future
remediation and reclamation activities, future mineral exploration
including the potential structural geology of mineral properties,
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, estimated production headings through the
remainder of 2022, the timing of activities and reports, the amount
of estimated revenues and expenses, the success of exploration
activities, permitting time lines, and 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, the risk that the
Arrangement may not close when planned or at all or on the terms
and conditions set forth in the Arrangement Agreement; the failure
of the Company and Hecla to obtain
the necessary regulatory, court, securityholder, and other
third-party approvals, or to otherwise satisfy the conditions to
the completion of the Arrangement, in a timely manner, or at all,
may result in the Arrangement not being completed on the proposed
terms, or at all; changes in laws, regulations and government
practices; if a third party makes a Superior Proposal (as defined
in the Arrangement Agreement), the Arrangement may not be completed
and the Company may be required to pay the Termination Fee; if the
Arrangement is not completed, and the Company continues as an
independent entity, there are risks that the announcement of the
Arrangement and the dedication of substantial resources of the
Company to the completion of the Arrangement could have an impact
on the Company's current business relationships and could have a
material adverse effect on the current and future operations,
financial condition and prospects of the Company; 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 assumptions as to the ability of
Alexco and Hecla to receive, in a
timely manner and on satisfactory terms, the necessary regulatory,
Court, securityholder and other third party approvals, the
satisfaction of the conditions to closing of the Arrangement in a
timely manner and completion of the Arrangement on the expected
terms, the expected adherence to the terms of the Arrangement
Agreement and agreements related to the Arrangement Agreement, the
adequacy of our and Hecla's
financial resources, 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.
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SOURCE Alexco Resource Corp.