The share price of Alexco Resources took a tumble on Wednesday after the company announced the temporary suspension of milling activities at the Keno Hill mine, in Yukon, to allow for more time to get further ahead with underground development.
Chairperson and CEO Clynton Nauman said Alexco previously indicated that its operations ramp-up plan was running well behind schedule. “At this juncture, we have enough information to determine that the rate of improvement in underground performance is not sufficient to reach a sustainable 400 t/d and cash self-sufficiency in 2022.”
He said Alexco had to get further ahead with underground development and that it required five to six months of focused underground advance to ensure it had available, and could maintain, two to three levels of development ahead of primary production levels in each mine.
“This refocusing of operations is the right decision and it is unquestionably in the best interest of the mine and the company as a whole. The alternative of continuing to operate under the status quo with slow improving ore deliveries to the mill for the balance of 2022, only serves to diminish the benefit of extremely high-grade ore, instead of using that benefit to generate free cash flow and hence returns for our shareholders in early 2023,” Nauman said.
With transition of operations activities to an interim development-focused plan, additional financing will be required. The company has about C$14-million with negative working capital of about C$4.5-million.
Alexco’s stock plunged 42% to C$0.60 a share on the announcement.