Alexco Resources Corp. [AXR-TSX; AXU-NYSE] said Monday March 24 that it is raising $7.5 million from an offering of 4.05 million shares priced at $1.85 per share. The company said it has struck a deal with an underwriting syndicate co-led by Cormark Securities Inc., Cantor Fitzgerald Canada Corp. and including Canaccord Genuity Corp.
Alexco has granted the underwriters a green shoe option to purchase up to an additional 608,175 shares at the offering price, potentially increasing the proceeds to $8.6 million. The green shoe option will remain open for 30 days after the date of closing.
The company said it intends to use the net proceeds of the offering for preservation and measured advancement of mine development activity at its flagship Keno Hill silver project in the Canadian Yukon. Part of the proceeds is also earmarked for exploration and general working capital.
Alexco advanced on the news, rising 1.9% or $0.04 to $2.10. The shares are currently trading in a 52-week range of $1.00 and $3.74.
The 100%-owned United Keno Hill Mine ranks as Canada’s second largest producer of silver, behind Cobalt, Ontario.
During an illustrious history, it produced 217 million ounces of the precious metal. On March 28, 2019, Alexco released the results of an independent pre-feasibility study (PFS), which puts the Keno Hill Project “on a clear path to production,” the company said.
The PFS contemplated production of approximately 1.2 million tonnes at an average grade of approximately 805 g/t silver, 2.98% lead, and 1.13% zinc from four deposits (Bellekeno, Flame & Moth, Bermingham and Lucky Queen).
The average processing rate during the proposed 8-year mine life was estimated at 430 tonnes per day and Keno Hill was expected to produce approximately 4.0 million ounces of silver annually, contained in lead and zinc concentrates.
In 2020, the company has said it plans to conduct a $3.5 million exploration campaign to complete 11,500 metres of surface drilling to target Bermingham Deep, the Inca Vein and other targets in the district. In addition, the company plans to conduct an airborne survey across the district and a 3,500-metre RAB generative drilling campaign at multiple targets in the district.
The pre-feasibility study was based on total Probable Reserves of 30.4 million ounces of silver, of which roughly half is hosted by Flame & Moth. Bermingham is estimated to host 11.3 million ounces. Of the balance, Lucky Queen has 2.8 million ounces and Bellekeno has approximately one million ounces.
The pre-feasibility study estimated initial capital costs at $23.2 million, consisting of $17.9 million on surface and underground development costs to reach mill commissioning, plus an additional $5.3million of net working capital for two months of mill operations ramp-up prior to positive cash flow.