Mar 12, 2020 1:57 AM ET
Alexco Announces Year-end 2019 Results
iCrowd Newswire -
Mar 12, 2020
VANCOUVER,- Alexco Resource Corp. (NYSE American: AXU) (TSX: AXU) (“Alexco” or the “Company”) today reports financial results for the quarter and year ended December 31, 2019 (“Q4 2019” and “FY 2019”, respectively). For Q4 2019 Alexco reported a net loss of $6.3 million (“M”), or ($0.06) per share. For FY 2019 Alexco recorded a net loss of $8.9 M or ($0.08) per share. The Company’s net cash position and working capital at December 31, 2019 were $6.8 M and $10.1 M, respectively. Alexco Environmental Group (“AEG”), a wholly owned subsidiary of Alexco, recorded revenues of $29.2 M and a gross profit of $6.1 M during FY 2019.
On February 14, 2020 AEG was subsequently sold to AEG management for consideration of $13.35 M (see press release dated February 18, 2020 entitled “Alexco Divests Subsidiary Environmental Business AEG”). All amounts below include results from AEG operations.
FY 2019 Highlights
- Overall, Alexco reported a net loss of $8.9 M, or $(0.08) per share for the year ended December 31, 2019 including non-cash cost adjustments of $2.3 M compared to a loss of $8.5 M, including non-cash cost adjustments of $2.6 in 2018. The difference in operating loss was due to non-cash adjustments resulting from the treatment of the embedded derivative on the Wheaton Precious Metals streaming agreement, share-based compensation expense, deferred income tax expense and a reduction in Alexco Environmental Group (“AEG”) profitability in 2019.
- The Corporation’s cash and cash equivalents at December 31, 2019 totaled $6.8 M compared to $8.6 M at December 31, 2018, while net working capital totaled $10.1 M compared to $10.2 M at December 31, 2018. The Corporation’s restricted cash and deposits at December 31, 2019 totaled $2.8 M compared to $2.7 M at December 31, 2018.
- On February 14, 2020 the Corporation entered into a share purchase agreement (the “Share Purchase Agreement”) for the sale of AEG, to AEG’s executive management (“AEG Management”) led by AEG’s President (a related party due to the AEG President being a key member of management of Alexco). Under the terms of the Share Purchase Agreement, AEG Management purchased all of the shares of AEG in consideration for payment to Alexco of $13.35 M. On closing of the transaction, AEG Management paid $12.1 M in cash, with the balance of $1.25 M payable pursuant to a promissory note that matures on February 14, 2021. Alexco retained ownership of Elsa Reclamation & Development Company (“ERDC”) and will execute the clean-up of historical mines in the District under its existing contractual arrangement with the Federal Government of Canada.
- On June 7, 2019, the Corporation completed a bought deal public offering and issued 6.5 M common shares at a price of US$1.00 (C$1.33) per share for aggregate gross proceeds of US$6.5 M (C$8.6 M) for net cash proceeds of US$5.8 M (C$7.7 M).
- On April 23, 2019 the Corporation completed a private placement, on a bought deal basis, of 1,842,200 flow-through common shares at a price of $1.90 per share for gross proceeds of $3.5 M.
MINE OPERATIONS AND EXPLORATION
- The Corporation announced the results of an independent pre-feasibility study on its 100% owned Keno Hill Silver project (see press release dated March 28, 2019 entitled “Alexco Announces Positive Pre-Feasibility Study for Expanded Silver Production at Keno Hill Silver District”) and on May 8, 2019, and as amended February 13, 2020, the Corporation released an independent technical report, effective as of March 28, 2019, entitled “NI 43-101 Technical Report Prefeasibility Study of the Keno Hill Silver District Project Yukon Territory, Canada” (the “PFS”).
- The Corporation completed the planned surface capital construction activities at the Bermingham deposit consistent with work outlined in the PFS, including installation of the underground production-related portal, construction of a lined treatment pond, initial construction of a coarse ore storage pad and upgrading of existing haul roads.
- During FY, 2019, Alexco completed an 8,333 meter (“m”) surface exploration diamond drilling program focused on potential resource expansion and deeper targets in the vicinity of the Bermingham deposit “Bermingham Deep”, as well as following up on reconnaissance drilling from the 2018 program. Initial results from exploration at Bermingham Deep were announced in September 2019, with the remainder of the results released in December 2019.
- Alexco has the requisite permits and authorizations for development and future ore production from the Bellekeno, Flame & Moth, Lucky Queen, and Onek deposits. Amendment of the Corporation’s Quartz Mining Licence (“QML”) was completed in the fourth quarter of 2019, which incorporates the Bermingham deposit into the mine plan. Alexco is in the final steps of renewing the Water Use Licence (“WUL”) having completed the public hearing in mid-February 2020 and expects the granting of WUL renewal late in the first quarter of 2020. Once renewed the WUL will authorize the use of water and deposition of waste from mining and milling operations at the Bermingham, Flame & Moth, Bellekeno and Lucky Queen (and Onek) deposits for a period of 15 years.
ALEXCO ENVIRONMENTAL GROUP (“AEG”)
- AEG recognized revenues of $29.2 M for the year ended December 31, 2019 for a gross profit of $6.1 M achieving a gross margin of 21%, compared to revenues of $19.9 M for 2018 for a gross profit of $6.1 M achieving a gross margin of 30%. AEG recognized an operating loss before taxes for the year ended December 31, 2019 of $1.4 M. The gross profit margin percentage declined in 2019 primarily due to a scale-up of the overall business as well as the use of third party contractors to complete construction of a larger water treatment system complex in Ontario and two new longer-term projects coming online, which incurred higher than normal up-front costs.
Alexco Resource Corp.