Earnings Alert – Alexco Resource Corp. (NYSE:AXU)

Shares of Alexco Resource Corp. (NYSE:AXU) have been recently spotted trading -25.41% off of the 52-week high price. On the other end, company shares have been noted 25.45% away from the low price over the last 52-weeks. 52 week range of the stock remained $ 1.10 – 1.85. Switching over to some distances from popular moving averages, we see that the stock has been recorded -5.41% away from the 50 day moving average and -2.00% away from the 200 day moving average. Moving closer, we can see that shares have been trading 0.71% off of the 20-day moving average.

The Canada based company Alexco Resource Corp. moved with change of 1.47% to $1.38 with the recent traded volume of 131676 shares versus to an average volume of 309.17K. The stock was down in the 5 days activity -2.86%. The one month performance of stock was high 3.03%. AXU [NYSE] shares are above 7.94% for the quarter and driving a -7.48% over the course of the past year and is now down -14.47% since this point in 2018.  Right now AXU [NYSE] beta is -0.43. The average volatility for the week and month was at 3.90% 5.83% respectively.

Alexco Resource Corp. (NYSE‑American: AXU, TSX: AXR) (“Alexco” or the “Corporation”) recently reported financial results for the fourth quarter and year ended December 31, 2017.  All figures are expressed in Canadian dollars unless otherwise stated.  For the fourth quarter of 2017 Alexco recorded a net loss of $1.7 million (“M”) or $0.02 per share. Alexco Environmental Group (“AEG”), a wholly owned subsidiary of Alexco, recognized revenues of $2.5 M with a gross profit of $993,000. For the full year 2017 Alexco recorded a net loss of $7.6 M or $0.08 per share, including $4.5 M in depreciation, share-based compensation expense and other non-cash costs. The working capital position at year end was $18.4 M.

2017 Highlights

The Corporation’s cash and cash equivalents at December 31, 2017 totaled $17,906,000 compared to $20,382,000 at December 31, 2016, while net working capital totaled $18,414,000 compared to $23,443,000 at December 31, 2016. In addition, the Corporation’s restricted cash and deposits at December 31, 2017 totalled $7,092,000 compared to $6,948,000 at December 31, 2016.

Alexco Environmental Group (“AEG”), recognized revenues of $10,732,000 in 2017 for a gross profit of $4,000,000 and a gross margin of 37% compared to revenues of $11,361,000 in 2016 for a gross profit of $2,866,000 and a gross margin of 25%.

On March 29, 2017 the Corporation 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 the Amended SPA with Wheaton (see news release dated March 29, 2017 entitled “Alexco and Silver Wheaton Amend Silver Purchase Agreement and Alexco Announces Positive Preliminary Economic Assessment for Expanded Silver Production at Keno Hill”).

On March 29, 2017 the Corporation 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.

The Corporation received an amended Type A Water Use Licence (“WUL”) from the Yukon Water Board authorizing, subject to certain conditions, the use and discharge of treated water and deposition of dry stacked tailings from the Flame & Moth deposit.

In August 2017, the Corporation received an amended Class IV permit allowing the Corporation to commence a 580 meter (“m”) underground exploration decline into the high grade Bermingham silver deposit. To date the Corporation has completed 430 m of the ramp and decline with completion expected in April of 2018.

On November 7, 2017 the Corporation announced comprehensive results from its 2017 surface diamond drilling exploration program, drilling a total of 13,832 m in the immediate vicinity of the Bermingham deposit at a cost of approximately $3,600,000.

On May 30, 2017, the Corporation closed a flow-through private placement whereby the Corporation issued 4,205,820 flow-through shares at a price of $2.15 per share for aggregate gross proceeds of $9,042,513.

The Corporation disposed of investments in marketable securities for proceeds of $2,003,000 and a pre-tax realized gain of $1,204,000.

Highlight Subsequent to 2017

Subsequent to year end, the Corporation entered into a definitive credit agreement with Sprott Private Resource Lending (Collector), L.P. to provide a US$15,000,000 credit facility.

Alexco’s Chairman and Chief Executive Officer Clynt Nauman said, “2017 was a pivotal year in which we started the transition from explorer – developer to developer – producer. This evolution began in September 2017 at the Bermingham deposit with initiation of a 580 m underground exploration decline which is now approximately 75% complete. Following completion of mining work, two underground drills will be positioned to complete 5,000 meters of infill and extension drilling of the high grade Bermingham silver deposit. Concurrently our mining crews will relocate to Flame & Moth where an additional 965 m of decline ultimately needs to be driven to access the Flame & Moth deposit. Optimization of development and mine plans, new resource calculations and expanded metallurgical testing will be ongoing in anticipation of a prefeasibility study to be complete in Q3, 2018. As we move through Q2 we will be very focused on market conditions, commercial terms and final permitting progress as part of our disciplined progress toward a final production decision.”

Keno Hill Exploration and Development

Alexco’s current focus is to re-start mining operations at Keno Hill, subject to several considerations including commodity prices and market conditions. Alexco has the requisite permits and authorizations for future ore production from the Bellekeno, Flame & Moth, Lucky Queen, and Onek deposits, as well as the necessary authorization to drive the Bermingham decline, currently ongoing. In November 2017 a project proposal for environmental assessment was submitted to Yukon Environmental and Socio-economic Assessment Board (“YESAB”) for future production and processing of ore from the Bermingham deposit. It is anticipated that this application process, including completion of the amendments to Alexco’s Quartz Mining Licence (“QML”) and WUL will be completed by the end of 2018 or early 2019.

In December 2017 the Company received an amendment to its WUL from the Yukon Water Board for the development and operation (and eventual closure) of the Flame & Moth deposit.

2017 Exploration Program

In early June, the Corporation commenced a surface diamond drilling exploration program to further explore potentially mineralized structural targets in the immediate vicinity of the Bermingham deposit. In September 2017 the Corporation completed its 2017 exploration program as planned, drilling a total of 13,832 m. Program costs were $3,600,000. Comprehensive drill results were released on November 7, 2017 (see September 7, 2017 press release entitled “Alexco Completes 2017 Surface Exploration Program, Expands Bermingham Silver Deposit, Advances Underground Development”).

The Corporation also commenced an underground exploration program at the high grade Bermingham silver deposit. In August 2017, the Corporation received the required amended Class IV permit allowing the Corporation to commence the 580 m underground exploration decline. As of the date of this MD&A the Corporation has completed 430 m of the ramp and decline with completion expected in April 2018. Subsequent to completion of the Bermingham decline, a 5,000 m underground drill program will be initiated to tighten up spacing to upgrade the existing inferred resources to indicated resources and to upgrade existing indicated resources to measured resource while also increasing the confidence in the geological model. The total estimated cost of the underground exploration development and drilling project is $8,700,000, which includes capital purchases related to underground equipment.

Financial

Alexco’s cash and cash equivalents at December 31, 2017 totaled $17.9 M compared to $20.4 M at December 31, 2016, while net working capital totaled $18.4 M compared to $23.4 M for the same dates.  With its cash resources and net working capital on hand at December 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 the next twelve months.

Alexco Environmental Group

In the fourth quarter of 2017 AEG recorded revenues of $2.5 M and a gross profit of $993,000 for a gross margin of 40%, compared to revenue of $2.9 M and a gross profit of $881,000 for a gross margin of 30% in the fourth quarter of 2016.  The increase in 2016 revenue was attributed to the AEG completion of the expansion of an interim water treatment plant at the Gold King Project.

Alexco continues to pursue opportunities to expand its environmental services business while ensuring that it limits Alexco’s balance sheet exposure to this actively growing business.

About the Author

Kyle Webster
Kyle Webster
Kyle Webster is a self taught investor and follows the value investing approach to picking stocks. He possesses over 10 years of investment experience, an M.B.A. from Louisiana State University, and is also certified in Risk Management Assurance. Kyle is a Certified Internal Auditor, Data Miner, and author with a career broadly spanning over multiple business areas. He has exploited those observations and developed investment tactics within a fundamentally sound long-term investment strategy. He currently covers Research News category for our site. He can be reached via Email Contact -  kyle@mostvolatilestocks.com.

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