Alexco Resource Corp

Thank you for standing by. This is your conference operator. Welcome to the Alexco Resource Corp Full Year 2021 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Paul Jones, Senior Vice President, Corporate Development. Please go ahead.

Good morning, ladies and gentlemen. Today is Monday, March 21st, and I welcome you to the Alexco Resource fourth quarter and full year 2021 results conference call. This call is being webcast, and a recording can be accessed through the events and webcast section of our website at alexcoresource.com later today. Our website also contains our most recent news releases and our financial statements for the quarter-ended December 31st, 2021 results. All amounts referenced today are in Canadian dollars, unless otherwise indicated. Today, our Chairman and CEO, Clint Nauman, will discuss our most recent results, and he will be joined by our President, Brad Thrall, and our CFO, Mike Clark, during the question and answer period. Please be reminded that some statements made today may constitute forward-looking information within the meaning of applicable securities regulations. Past performance discussed today is not indicative of future results, and our business involves several risks that could cause results to differ from projections. Investors are encouraged to review the disclosures pertaining to risks that can be found in our most recent regulatory filings available on our website on CDAR and EDGAR. I will now leave you with Clint Nauman.

Thank you, Paul. Good morning, good afternoon, and thank you to those who are joining our call today. I'm going to keep my comments brief this quarter. Our performance in Q4 and into the early parts of 2022 has been well short of expectations, as you have seen from our news release earlier this morning. However, in my short time today, I want to assure you that we have weathered the most challenging issues and we are cautiously optimistic that we will post improved operating conditions and performance as we move into the balance of 2022. Firstly, from a purely pragmatic viewpoint, while the impact of COVID was significant at site in December and extended into January, we were further impacted by serious supply chain issues with respect to critical shares in February, leading to reduced equipment availability and much slower underground progress. The fact of the matter is that we can and must do better anticipating and overcoming these types of problems. As mentioned at the outset, I'm cautiously optimistic that the challenges we face recently are in the rearview mirror and that we are well positioned to deliver Canada's only primary silver mine to full production. Today at Birmingham and Flamin' Moth, we've completed more than 2,300 meters of lateral development and are now in ore at both deposits. Specifically, we currently have four ore headings on two levels available at our Flamin' Moth deposit, and we continue with long-haul retreat mining at our first large dope in the Birmingham deposit. Our upgrades and investments in the district mill have been completed. And when we've had sufficient ore available, we've had several campaigns at and above our design capacity of 200 tons per day, all the while meeting or exceeding our metallurgical model for silver recoveries. However, we are running approximately three to four months behind our schedule, which originally saw us achieving design capacity in Q1 2022. Clearly, this has put pressure on our balance sheet, And in that regard, we have available to us a $10 million U.S. prepayment revolving credit facility with a thousand trade off-taker from which we have currently drawn $5 million U.S. and can access the remaining $5 million if necessary. Accessing additional working capital is simply a function of our success in being able to deliver the targeted oil volumes to the mill to generate revenue offsets. As we speak today, we do see improved ore availability, improved cycle times underground, and improved delivery of ore to the mill. It is on us to maintain and increase this ore delivery in Q2 2022. Meantime, we are rescheduling our mine plan and anticipate being in a position to provide guidance for 2022 production in May, a couple of months from now. Meantime, we have onboarded and trained our own complete mining force, as well as built out a team of highly motivated and skilled service operators. I do want to commend our team for their dedication and steadfast commitment to the project. As a team, we have overcome a great number of obstacles. Improving results I expect to see over the next few months is directly related to their efforts. Today, we also announced some short-term production guidance for Keno Hill. We now expect to produce between 75 and 100,000 ounces of silver in Q1 2022, and between 450,000 and 550,000 ounces of silver in Q2 2022. Furthermore, as I previously mentioned, we anticipate being able to provide second half 2022 guidance in conjunction with our Q1 financial report on May 12th. I'd be remiss if I didn't take a brief moment to comment on the success that we've had on the exploration front. Specifically, after completing approximately 17,700 meters of drilling focused on the Birmingham deeps, on January 18th, we announced a 43% increase in Birmingham's indicated resource and a 70% increase to its inferred ounces. Birmingham now has over 47,000 million ounces of indicated mineral resources at a grade of 939 grams per tonne silver, with inferred resources of nearly 20 million ounces at a grade of 735 grams per tonne silver. By any measure, this is a stellar result, and in 2022, we'll be conducting an additional 15,000-metre program to identify and test areas exhibiting geological mineralization signatures similar to our Birmingham discovery starting with targets adjacent to the current reserve area. Meantime, as we have previously mentioned, as part of rescheduling 2022 production at Birmingham, we'll be looking at longer-range development alternatives to reach the deeper levels of this deposit and potentially accessing this new deeper discovery zone sooner rather than later. We've made a lot of progress over the last 18 months, and I expect the next few quarters will be critical for Lexco and Keno Hill. Lastly, I wanted to take this opportunity to thank our shareholders also for their patience and support of Glaxo as we delivered Keno Hill back to full production. With that brief statement, I'd like to ask the operator to open the call for questions.