Alexco Resource Corp (TSX:AXR,NYSE-American:AXU) (“Alexco” or the “Company”) today reports financial results for the first quarter ended March 31, 2018.  All figures are expressed in Canadian dollars unless otherwise stated.  For the first quarter of 2018 Alexco recorded a net loss of $3.3 million (“M”) or $0.03 per share, which included $2 M in depreciation, share-based compensation expense and other non-cash costs. Alexco Environmental Group (“AEG”), Alexco’s environmental consulting business, recognized revenues of $2.8 M with a gross profit of $830,000. Alexco’s working capital position as of March 31, 2018 was $18.4 M.

First Quarter Highlights

  • The Company’s cash and cash equivalents at March 31, 2018 totaled $13.2 M compared to $17.9 M at December 31, 2017, while net working capital totaled $18.4 M compared to $18.4 M at December 31, 2017. In addition, the Company’s restricted cash and deposits at March 31, 2018 totalled $7.1 M compared to $7.1 M at December 31, 2017. $6.3 M of the restricted cash was related to Keno Hill reclamation security, subsequently restructured (see below).
  • Alexco Environmental Group (“AEG”), recognized revenues of $2.8 M in the first quarter of 2018 and a gross profit of $830,000 achieving a gross margin of 30% compared to revenues of $1.9 M in the 2017 period for a gross profit of $549,000 achieving a gross margin of 28%.
  • On February 23, 2018, the Company established a credit facility (the “Credit Facility”) for up to US$15 M with Sprott Private Resource Lending (Collector), L.P. (“Sprott”). As of the date of this press release, no amounts have been drawn down on the Credit Facility.

Highlights Subsequent to the First Quarter

  • Alexco announced completion of the Bermingham underground exploration decline and the commencement of 5,000 meters (“m”) of infill and exploration drilling in and around the upper portion of the Bermingham high grade silver deposit.
  • $6.3 M of cash posted as security for its Keno Hill property was replaced with a surety bond. The surety instrument is collateralized with $2.3 M of cash, the balance of $4 M being reclassified to unrestricted cash.  In addition, security posted in cash in the amount of $513,000 (US$398,000) has also been released to the Company on issuance of a State of Colorado “No Further Active Remediation” filing which represents the final step in the successful completion of the Globeville Smelter Project.
  • Alexco’s wholly owned US subsidiary, Alexco Water and Environment Inc. (“AWE”), entered into a Master Services Agreement with Colorado Legacy Land LLC to become the Operator of Responsible Charge for the Schwartzwalder Mine and the former Cañon City Uranium Mill reclamation and cleanup projects. These long-term arrangements are expected to take more than ten years to complete and are expected to generate revenue in excess of US$20,000,000 for AWE.

Alexco’s Chairman and Chief Executive Officer Clynt Nauman said, “As we move through Q2 of 2018, the pace of our Keno Hill work has intensified with accelerated work to complete the Bermingham decline, initiation of a pre-feasibility study and continued mill refurbishment and modifications in addition to planning the upcoming field season. With the Bermingham decline completed, we are positioning two underground drills to complete 5,000 m of infill and extension drilling of the high grade Bermingham silver deposit. Concurrently our mining crews will relocate to Flame & Moth where an additional 530 m of decline ultimately needs to be driven to access the Flame & Moth deposit. As we move through Q2 we will be very focused on market conditions, prevailing commercial terms and final permitting progress as part of our disciplined approach 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, commercial arrangements and market conditions. Alexco has the requisite permits and authorizations for future ore production from the Bellekeno, Flame & Moth, Lucky Queen, and Onek deposits. 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. With respect to the required Bermingham authorizations, Alexco is seeing materially increasing timelines for environmental assessment and authorization processes in the Yukon and therefore anticipates a delay in the issuance of the required amendments to Alexco’s Water Use License (“WUL”) into Q1 of 2019.

2018 Surface Exploration Program

On May 7, 2018 the Company commenced an expanded 15,000 m, $4 million surface exploration diamond drilling program that will comprise at least 45 holes and start with two drills with a third to be added mid-summer.

Following very successful exploration achievements in the 2013 – 2017 period, the Company in 2018 is slightly changing its exploration strategy to identify new areas likely to host apparent higher level silver-rich deposits (typified by the Bermingham discovery), as well as initiating a new program targeting apparent deeper level silver and base metal rich deposits (typified by the historic Hector-Calumet deposit) containing upward of 50 million ounces of silver. The historic Hector-Calumet mine located approximately 1 km northeast of Bermingham produced approximately 96 million ounces of silver at a reported grade of 1,090 g/t silver. The surface exploration program will extend through to October 2018 with results expected to be finalized in the fourth quarter of 2018.

2018 Underground Exploration Program

On May 1, 2018 the Company commenced installation of two diamond drill stations and mobilization of underground drilling equipment and crews to complete an initial 5,000 m of infill and exploration drilling at approximate 10 mcenters for anticipated mining blocks in and around th