Alexco Resource Corp.
Q3 2020 Earnings Call Transcript

Published: 13 Nov 2020

[Operator:]

Thank you for standing by. This is conference operator. Welcome to the Alexco Resource Corp. third quarter 2020 conference call and webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will an opportunity to ask questions. . I would now like to turn the conference over to Kettina Cordero, Director of Investor Relations. Please go ahead.

[Kettina Cordero:]

Good morning. Today is Friday, November 13, 2020 and I welcome you to the Alexco Resource third quarter conference call. This call is being webcast live and can be accessed through our website at alexcoresource.com. An archive of the call will be available later today on our website in the Events and Webcast section. Our website also contains our most recent news releases and our financial statements for the quarter ended September 30, 2020. All amounts mentioned today are in Canadian dollars, unless otherwise indicated.

[Clynt Nauman:]

Thank you Kettina and welcome to everybody. Thank you for attending this morning. So we have a relatively short discussion here. Then we will move on to the question-and-answer section. So just to let you know that development activities at Keno Hill Silver District kicked into high gear during the third quarter and we are progressing for a restart and commissioning of the district mill in the very near term. This morning, I am going to provide a brief summary of the work we have completed at sites since our last call, our financial and corporate performance during the third quarter, our 2020 exploration program which, as you remember, focused on the Bermingham deep target and is now nearing completion and I will also discuss our general plans for Keno Hill in 2021 before opening the call for your questions. So let's review the highlights from the third quarter 2020. On the operations front, as I mentioned, we are getting ready to restart the mill. We have completed the installation of new cyclones, the addition of a new tailings filter press. We have modified the fine ore feeder. And we have executed on a numerous other ancillary projects throughout the mill complex. The installation of a second ball mill is ongoing as is the construction of a crusher enclosure and ventilation system as well as the installation of two concentrate regrind mills. Our team has wet-tested the mill and we will provide further updates on mill performance in the near term. Other surface construction activities at site such as the expansion of the camp accommodation complex including two new bunkhouse units, an upgraded administration complex and employee dry and wash facilities are nearing completion. Mine rehabilitation is complete at all three mines and each are in carious stages of development and ore extraction. The majority of our mining fleet has arrived and is being commissioned and is currently in operation.

[Operator:]

. The first question comes from Mike Niehueser from Scarsdale Equities. Please go ahead.

[Mike Niehueser:]

Hi Clynt. Happy Friday, the 13th.

[Clynt Nauman:]

I knew you were going to mention that, Mike. Go ahead.

[Mike Niehueser:]

Well, now it's out. It looks like from this morning or last night's release, that expenses were a little higher in the third quarter for dewatering and modifications. But overall it looks like you are adhering to your schedules and timelines for surface and underground work. Are you pretty satisfied with how things are coming along to be able to start processing ore through the mill?

[Clynt Nauman:]

Well, I mean just Brad is in a much better position to answer that. And I am going to hand it off to him. Let me just say that the Bellekeno mine and the mill are kept on care maintenance. So rather than capitalize those costs, Mike, we have just been expensing them as we have in the past and separating them from the capital construction activity. In terms of the schedule, we are taking a pretty close look in how we are preceding here. We are putting the pieces together. As you know, we are operating in three mines currently. The important pieces for us to extract the ore that's required from Bellekeno mine and to actually shut that operations down and move over to Flame & Moth and Bermingham. So we have this process going on where we are transitioning out of one mine, transitioning into two others, both of which require ventilation raises to be driven. So we are walking down that line and at the present time, we are pretty comfortable with progress. But we will update the plan as we move along here towards the end of the year.

[Brad Thrall:]

No. I think that pretty much covered it, Mike. Again, the plan has always been to commission the mill on just the Bellekeno ore which is essentially a salvage kind of project, if you will, with remnant tons. And our plan has been to kind of slowly ramp up in Q1 and then into Q2 by the time we can start to reach full capacity. So I mean it's important for us to finish up Bellekeno so that we can continue to focus all of our resources on Flame & Moth and Bermingham.

[Mike Niehueser:]

Probably another question, probably for Brad, since you are there. I am pretty much familiar with the project with the crusher and the ball mill and the lead and zinc circuits and the filters for concentrate and tailings. But could you elaborate on some of the modifications and optimizations that you have done to the mill and how they are improving, expected to improve performance?

[Brad Thrall:]

Yes. Good question, Mike. Again, we will start the mill on just the Bellekeno ore which obviously we are very familiar with the metallurgy and performance of that ore. With respect to certain improvements, we have moved away from a derrick screen in the mill and gone to cyclones which we think will have a real benefit on throughput and classification. We have made some modifications to our primary grinding mill and put an overflow travel on that mill. Within the floatation circuit, we have made a number of changes within the circuit there, based on historic performance. And again, remember that mill operated pretty steady at 320 tons per day or so when we did suspend operations back in 2013. So this additional second ball mill and the concentrate regrind mills, we really don't need those immediately for this restart. So yes, just a lot of just a little projects here and there. But certainly, the mill is in really good condition and in shape here for commissioning.

[Mike Niehueser:]

Okay. And when do you anticipated you will be able to start drilling from underground for exploration or infill drilling?

[Clynt Nauman:]

Yes. I mean, that's a good point too, Mike. And it goes with the whole optimization effort we are looking at. I think that for production or preproduction purposes, we will probably be drilling underground in the first quarter. We would be pretty confident we would be drilling underground in the first quarter. In terms of underground exploration, I think we want to get these operations up and stabilized before we consider driving exploration platforms or doing anything other than diverting our focus from production. So I mean I think underground exploration is a question for further down the road in 2020. And the reason I mentioned additional work at Bermingham, I think we will in 2021, if we do anything we are most likely to do that from the surface, not from underground.

[Mike Niehueser:]

And lastly, could you comment on timing for the water use license for the ERDC? It's just a huge bit of upside to the company that just is not recognized. And for any other permitting that you are going to have to complete in the near term? Thank you very much.

[Clynt Nauman:]

Brad, do you want to take that?

[Brad Thrall:]

Yes, sure. Mike, our schedule internally is to hope we have that license. I mean it's essentially put together and ready to go. There is some final consultation that's underway. So I would expect to have that submitted to the Water Board prior to the end of this year. And you are certainly familiar with the process in the Yukon. I would hope that it would be relatively straightforward. I mean, again, this is a positive, for sure, in terms of cleaning up the district, the historic liabilities. But I would still probably anticipate a 12-the process to go through that Water Board application.

[Mike Niehueser:]

Well, thank you. I am looking forward to your drill results from 2020 and even more for your program for 2021. Thanks a lot.

[Clynt Nauman:]

Thanks Mike.

[Operator:]

. There are no other questions at this time. I would now like to turn the conference back over to Clynt Nauman for any closing remarks.

[Clynt Nauman:]

Thank you operator. At Keno Hill, we have a world-class primary silver historic district in a Tier 1 jurisdiction with significant potential to grow that's coming online in a strong precious metals environment. We are fully funded to production. We are on track to start concentrate production and sales in Q4 or in the very near future. I look forward to reporting on our mill commissioning and mining operations as we become Canada's only primary silver producer. Until then, thank you and stay safe. Thank you.

[Operator:]

Thank you. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.