Alexco Reports Third Quarter 2012 Financial Results

Alexco Reports Third Quarter 2012 Financial Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 11/05/12 -- Alexco
Resource Corp. (TSX:AXR)(NYSE MKT:AXU) today reports its financial
results for the third quarter of 2012. All figures are expressed in
Canadian dollars unless otherwise stated. For the quarter, Alexco
recorded income before taxes of $7.3 million and net income of $5.3
million or $0.09 per share, and total comprehensive income of $5.6
million. Alexco produced 514,879 ounces of silver during the quarter
at its Bellekeno mine in the historic Keno Hill Silver Mining
District in the Yukon, compared to 500,703 ounces of silver in the
same period a year ago. 
Highlights of Third Quarter 


 
--  Pre-tax income of $7.3 million, net income of $5.3 million ($0.09 basic
    and diluted earnings per share) and total comprehensive income of $5.6
    million for the three months ended September 30, 2012 on combined mining
    and environmental services revenue of $20.1 million 
--  Disposition of remaining interest in Brewery Creek property resulted in
    pre-tax gain of $6.3 million 
--  Bellekeno mine revenue of $17.3 million and gross profit of $4.0
    million, on sales of 3,942 tonnes of lead-silver and zinc concentrate 
--  Metal production of 514,879 ounces silver, 4.5 million pounds lead and
    1.2 million pounds zinc 
--  Recognized metal prices during the quarter averaged US$34.18 per ounce
    silver, US$0.96 per pound lead and US$0.88 per pound zinc 
--  Cash costs of production(1) over the quarter of $10.48 per ounce of
    payable silver produced, net of by-product credits, a 33% improvement
    from the previous quarter
 
(1) Cash costs of production per ounce of payable silver produced is a
non-IFRS measure with no standardized meaning prescribed under IFRS.
See page 12 of Alexco's September 30, 2012 MD&A for explanation and
reconciliation.

 
Alexco President and Chief Executive Officer Clynt Nauman said, "Our
third quarter performance reflects improvements which have resulted
from our revitalized mine operations focus. This work has delivered a
33% decrease in cash costs per ounce, a 12% increase in silver
production and an 11% increase in average throughput in the mill when
compared to the second quarter of this year. The credit f
or these
early improvements goes to our site operators, who have also been
busy with routine preparation for winter operations. With the mill
now on its way to achieving design capacity, the mill throughput is
expected to outpace the mine output for the first time since we
commissioned Bellekeno in 2011. Consequently, we intend to take
advantage of this circumstance during the fourth quarter to catch up
on deferred mill maintenance, crew training and preparation for
increased ore feed as we continue to move toward commissioning two
new mines. Our larger vision remains the same: to put the Lucky Queen
and Onek mines into operation, increase our overall annual production
in 2013 and contain cash costs for the longer term." 
Nauman also noted the Alexco Environmental Group (AEG) has been
performing nicely this year, with gross profit for the first nine
months of the year improving to nearly $2 million, compared to a
gross loss of $1.3 million during the same period last year. "Along
with other projects, AEG is now engaged in a soils and groundwater
remediation project at a former smelter site near Denver, a
significant undertaking that is generating new revenue and margins
which help the overall business," he said. 


 
Summary Financial Results and Information                                   
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(expressed in thousands of                                                  
 dollars, except per share                                                  
 and recognized metal price       Three Months Ended       Nine Months Ended
 amounts)                               September 30            September 30
                                    2012        2011        2012        2011
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Revenue from mining                                                         
 operations                       17,310      20,827      57,828      59,096
Gross profit from mining                                                    
 operations                        4,017       6,696      11,991      21,613
                                                                            
Revenue from environmental                                                  
 services                          2,779       1,428       6,571       4,875
Gross profit (loss) from                                                    
 environmental services            1,014       (275)       1,998     (1,281)
                                                                            
Revenue from all operations       20,089      22,255      64,399      63,971
Gross profit from all                                                       
 operations                        5,031       6,421      13,989      20,332
                                                                            
Income before taxes                7,250       3,842       7,242       9,937
Net income                         5,265       3,072       3,939       7,329
Total comprehensive income         5,570       3,110       4,247       7,354
Earnings per share - basic                                                  
 and diluted                       $0.09       $0.05       $0.06       $0.12
Cash flows from operating                                                   
 activities                        2,176       3,950      16,122      18,360
                                                                            
Recognized metal prices:(1)                                                 
 Silver (USD per ounce)           $34.18      $33.47      $31.80      $31.11
 Lead (USD per pound)              $0.96       $1.07       $0.93       $1.13
 Zinc (USD per pound)              $0.88       $0.97       $0.89       $1.00
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(1) Recognized metal prices represent average metal prices for revenue      
recognized over the period, weighted by dollar of revenue recognized.       

 
Bellekeno Mine Operations 
During the third quarter of 2012, the Bellekeno mine, located in the
Keno Hill Silver District in Canada's Yukon Territory, produced 4,341
tonnes of concentrate comprising 3,152 tonnes of lead-silver
concentrate and 1,189 tonnes of zinc concentrate. Total metal
production during the third quarter was 514,879 ounces of silver, 4.5
million pounds of lead and 1.2 million pounds of zinc, an approximate
12% increase in silver production over the second quarter of 2012.
Average mill throughput in the quarter increased to 270 tonnes per
day (tpd) compared to 234 tpd in the third quarter of calendar 2011
and 244 tpd during the three months ended June 30, 2012, reflecting
the positive impact of improvements made during the quarter in mill
efficiency. Head grades were similar to the immediately preceding
quarter and approximately 9% lower than in the third q
uarter of
calendar 2011, with the reduction due to initiation of mine
development in the lowest levels of the mine, locally increased
dilution in long-hole stopes higher in the mine, and an overall
increased supply of economic mill feed from outside the
currently-defined mine plan resource boundary. 
Revenue recognized from sale of concentrate in the three months ended
September 30, 2012 totaled $17,310,000, compared to $20,827,000 in
the third quarter of calendar 2011. For the current quarter,
recognized lead and zinc prices were lower than those of the
comparative period in 2011, approximately 10% and 9%, respectively,
though recognized silver prices were approximately 2% higher. Sales
volumes of payable metals for the current quarter were lower compared
to the same period in 2011, lagging the current quarter's production
increase due to the approximately three week period required to
transport concentrate from the mill to the point of sale at the
destination smelter. As a result, the majority of September
production will be recognized as sold in October and included in
fourth quarter sales volumes and revenues. 
Cash costs of production in the third quarter of 2012 are slightly
lower than those of the third quarter of 2011, as per-ounce
improvements in mining and milling costs were substantially offset by
reduced base metal credits and increased transportation, treatment
and refining charges. Cash costs of production this third quarter of
$10.48 per ounce of silver are significantly lower than those of
$15.53 per ounce during the second quarter of 2012, primarily
reflecting improved per-ounce mining, milling and transportation
costs as well as increased base metal credits, only slightly offset
by increased treatment and refining charges. This quarter represents
the first quarter where substantial tonnes were extracted by
long-hole stoping, with over one-third of mine production resulting
from this mining method. The per-ounce improvements in mining and
milling costs are due in part to the reduced per-tonne mining cost of
this method, as well as the benefit of increased mine and mill
throughput given the high fixed cost component of the Bellekeno
operations. Going forward, variances in the proportion of long-hole
stoping conducted each quarter may contribute to a variability in
reported quarterly cash costs. 
Comparative operating statistics for Bellekeno for the quarter and
year-to-date are summarized as follows: 


 
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                                  Three Months Ended       Nine Months Ended
                                        September 30            September 30
                                    2012        2011        2012        2011
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Ore tonnes mined               23,301(1)      12,533      63,969      51,160
Ore tonnes processed              24,573      21,532      68,033      58,510
Mill throughput (tonnes per          270         234         249         214
 day)                                                                       
Grade of ore processed:                                                     
 Silver (grams per tonne)            691         792         761         813
 Lead                               8.9%        9.2%        9.6%        9.9%
 Zinc                               4.5%        5.8%        5.0%        5.8%
Recoveries:                                                                 
 Silver                              94%         91%         93%         92%
 Lead in lead concentrate            93%         90%         90%         91%
 Zinc in zinc concentrate            51%         68%         54%         64%
Concentrate production:                                                     
 Lead concentrate:                                                          
  Tonnes produced                  3,152       2,760       9,482       7,819
  Concentrate grade:                                                        
   Silver (grams per tonne)        4,957       5,264       4,914       5,345
   Lead                              64%         64%         63%         67%
 Zinc concentrate:                                                          
  Tonnes produced                  1,189       1,808       4,433       4,596
  Concentrate grade:                                                        
   Silver (grams per tonne)          326         577         429         466
   Zinc                              47%         47%         45%         47%
Production - contained                                                      
 metal:                                                                     
 Silver (ounces)                 514,879     500,703   1,555,136   1,412,551
 Lead in lead con (pounds)     4,471,580   3,908,517  13,063,304  11,575,554
 Zinc in zinc con (pounds)     1,227,269   1,865,739   4,083,612   4,746,953
Sales volumes by payable                                                    
 metal:                                                                     
 Silver (ounces)                 437,890     459,297   1,510,927   1,315,403
 Lead (pounds)                 3,628,904   3,875,684  12,827,972  11,175,469
 Zinc (pounds)                 1,016,365   1,437,836   3,688,825   3,908,855
Cash costs of production(2)                                                 
 Per ounce of payable silver      $10.48      $10.83      $12.18       $8.71
  produced                                                                  
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(1) Revised from the third quarter 2012 ore tonnes mined reported in the    
production results news release dated October 15, 2012.                     
(2) Cash costs of production per ounce of payable silver produced is a non- 
IFRS measure with no standardized meaning prescribed under IFRS. See page 12
of Alexco's September 30, 2012 MD&A for explanation and reconciliation.     

 
Keno Hill Exploration 
In June 2012, Alexco announced an initial resource estimate for each
of the Flame & Moth and Bermingham properties in the Keno Hill Silver
District (see news release dated June 28, 2012 entitled "Alexco
Announces Initial Resource Estimates for Flame & Moth and
Bermingham"), resulting in a 52% increase in Alexco's combined
indicated resources at its Keno Hill properties. The Flame & Moth
estimated resource comprises newly-defined mineralization below and
along strike of historical shallow workings and the structure remains
open in all directions, while the Bermingham resource similarly was
identified below and along strike of historical open pit and
underground development. Both areas are the subject of ongoing
aggressive exploration under the current 2012 surface exploration
program, with the objective of further updating the estimated
resources by early 2013. 
The 2012 surface exploration program commenced in late March with two
drill rigs mobilized initially, increasing to four by the end of
April. The primary focus of the program to date ha
s been at the Flame
& Moth and Bermingham properties, as well as targets on the
Elsa-Husky trend, and as of September 30, 2012 approximately 23,600
meters had been drilled. The first preliminary results from this
program were announced October 9, 2012 in a news release entitled
"Alexco Expands Flame & Moth Deposit: Reports Grades Up to 71 Ounces
per Ton Silver Over 2.9 Meters, Mineralized Intervals to 7.4 Meters
Grading 25.7 Ounces per Ton Silver, and Accompanying Gold, Lead and
Zinc", with silver mineralization extended approximately 100 meters
up dip to the shallow subsurface immediately adjacent to the existing
milling complex. Initial holes drilled in this upper portion of the
Flame & Moth deposit have identified two mineralized structures up to
10 meters apart with each zone averaging about 3 to 3.4 meters true
width containing average silver grades of 13 to 20 ounces per ton,
accompanied by gold (ranging from 0.1 grams per tonne to more than 6
grams per tonne over select intervals) as well as lead and zinc. The
northeast-trending, moderately southeast dipping mineralized Flame
Vein structure has now been identified over a total strike length of
approximately 825 meters within two fault offset segments. The
deepest drill intersect is 400 meters below surface and the structure
is open at depth down-plunge and along strike. The mineralized
section of the Flame & Moth structure varies between 2.3 and 11.7
meters true width and averages approximately 5.5 meters. 
Rehabilitation of underground access to the new deposit at Lucky
Queen is well advanced, and Alexco is in the process of driving
access to the southerly extension of the historical Onek deposit,
with mine planning in the advanced stages for both deposits.
Potential initial production from these sources had originally been
targeted for the fourth quarter 2012 subject to final positive
development decisions. However, increasing environmental assessment
and permitting delays may restrict the ability of Alexco to process
material and initiate commercial production from these new mines
until the first quarter of 2013. 
Financial Position 
Alexco's cash and cash equivalents at September 30, 2012 totaled
$26,707,000 compared to $31,941,000 at June 30, 2012, while net
working capital totaled $29,428,000 compared to $32,176,000 for the
same dates respectively. The decrease in net working capital
primarily reflects net cash inflows from operations, offset by
seasonally high expenditure levels on Keno Hill District exploration
activity during the quarter plus rehabilitation and access
development activity at the historical Lucky Queen and Onek mine
sites, as well as Bellekeno mine development.  
Financial Report and Conference Call for Third Quarter 2012 
Full details of the financial and operating results for the third
quarter of 2012 are described in Alexco's interim condensed
consolidated financial statements with accompanying notes and related
Management's Discussion and Analysis. These documents and additional
information on Alexco are available on the Company's website at
www.alexcoresource.com and on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov/edgar.shtml. 
Alexco is holding an audio webcast conference call to discuss these
results at 11 a.m. Eastern (8 a.m. Pacific) on Tuesday, November 6,
2012. To participate in the live call, please use one of the
following methods: 


 
Dial toll free from Canada or the US: 1-877-407-8031
Dial from outside Canada or the US: 1-201-689-8031
Live audio webcast: www.alexcoresource.com 

 
Participants should connect five to ten minutes before the call. 
The conference call will be recorded, and an archived audio webcast
will be available at www.alexcoresource.com. Through November 13,
2012, a replay of the call will be available by telephone at the
following: 


 
Dial toll free from Canada or the US: 1-877-660-6853
Dial from outside Canada or the US: 1-201-612-7415
Replay Passcodes: Account #286, Conference ID #401974

 
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, P.Eng.,
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 Resource Corp. owns and operates the Bellekeno silver mine,
one of several mineral properties held by Alexco which encompass
substantially all of the historical Keno Hill Silver District located
in Canada's Yukon Territory. Bellekeno, which commenced commercial
production at the beginning of calendar year 2011, is Canada's only
operating primary silver mine. Alexco's primary near-term exploration
objective is to unlock value in the silver-rich Keno Hill District,
and is focused on growth by advancing its promising District
properties to development decisions. The Company's goal is to produce
7 million to 10 million ounces of silver annually within the next
decade. Employing a unique business model, Alexco also provides
mine-related environmental services, remediation technologies and
reclamation and mine closure services to both government and industry
clients through the Alexco Environmental Group, its wholly-owned
environmental services division. 
Keno Hill Silver District History 
Between 1921 and 1988, the Keno Hill Silver District was a
world-class silver producer, with more than 217 million ounces of
silver produced at average grades of 40.5 ounces per ton silver, 5.6%
lead and 3.1% zinc (Yukon Government's Minfile database). These
historical production grades would rank Keno Hill in the top 3% by
grade of today's global silver producers. 
Please visit the Alexco website at www.alexcoresource.com 
Some statements ("forward-looking statements") in this news release
contain forward-looking information concerning the Company's
anticipated results and developments in the Company'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 future remediation and reclamation
activities, future mineral exploration, 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, the
timing of activities and reports, the amount of estimated revenues
and expenses, the success of exploration activities, permitting time
lines, 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,
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, the Company has applied several material
assumptions, including, but not limited to, the assumption 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. The Company 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. 
Contacts:
Alexco Resource Corp.
Clynton R. Nauman
President and Chief Executive Officer
(604) 633-4888
(604) 633-4887 (FAX)
info@alexcoresource.com
www.alexcoresource.com