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spk01: Thank you for standing by. This is the conference operator. Welcome to the Alexco Resource Corp First Quarter 2022 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 one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Paul Jones, Senior Vice President, Corporate Development. Please go ahead.
spk07: Good morning, ladies and gentlemen. Today is Friday, May 13th, 2022. My name is Paul Jones and I welcome you to the Elexco Resource 2022 first quarter results conference call. This call is being webcast and a recording can be accessed through the events and webcasts section of our website at ElexcoResource.com later today. Our website also contains our most recent news releases and our financial statements for the quarter ended March 31st, 2022. All amounts mentioned 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 and on CDAR and EDGAR. I will now leave you with Clint Nauman.
spk02: Thank you, Paul. Good morning, good afternoon, and thank you to all those joining our call today. Given the volatile and challenging environment, I want to thank all our shareholders for their continuing support. and for helping shape Alexco's vision of becoming Canada's only primary silver producer. It's only been about eight weeks since our last conference call, so I'm going to take this opportunity to be very brief today, but I'm going to be happy to answer questions after this brief discussion. As we had noted in late March, reduced workforce availability coupled with supply chain interruptions led to a reduction in underground equipment operating hours in the early parts of the year. This was particularly so in January and February as COVID-related workforce issues gave way to delayed delivery of critical parts and components for underground equipment, primarily scoop trams. Even though we began to see improvement in workforce availability in March, supply line delays continued, as did availability of underground mechanics. But we did see operating improvements in March, with about 70 percent of the Q1 silver production being produced in March, about 56,000 ounces. And these improvements continued through April, where there's another 15 to 20 percent step up in silver production. In particular, we saw better advance rates in the ramp at Birmingham and an additional production level coming on stream, the 1815 level at Flamin' Moth. We've been encouraged by these improvements. They are admittedly short of where we need to be, so we do need to ensure that this trend continues in order for us to be successful over the longer term. Notably, our focus currently is for the near future and for the near future will be on improving underground equipment availability, which will have a direct impact on accelerating our access to additional underground ore faces. More equipment availability means more underground development, and that drives access to additional ore faces, which is key for ramping up throughput to the mill. We had previously anticipated providing formal guidance for the balance of 2022 as part of this release, but we are deferring that until we have more confidence in our projections. In the meantime, we're evaluating a number of production and operating scenarios which will drive our overall assumptions for underground development rates. With more clarity and confidence on how best to advance our development, we will then be in a better position to guide when we'll achieve our targeted 400 ton per day mill throughput. Although nearly all of our attention is focused on improving our underground productivities, we are launching a relatively small exploration program later in May, leveraging off our success at Birmingham. Now that we have a solid understanding of the structural geology architecture in which the larger and higher grade deposits occur at Keno Hill, we see many areas which require additional attention and testing, not only a long strike in both directions from our discovery of Birmingham, but also in a number of other areas in this very large district. Finally, I want to thank our shareholders for their patience and support of Alexco as we deliver Keno Hill back to full production. And with that very brief statement, I'd like to ask the operator to open the call for questions.
spk01: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. We will pause for a moment as callers join the queue. The first question is from Joseph Reeker with Roth Capital Partners. Please go ahead.
spk06: Hey, Clint and team. Thanks for taking my questions.
spk02: Hi, Joe.
spk06: Okay. So, obviously, I've asked about this a little bit on prior calls, but just want to follow up on it again. What can you guys do to kind of accelerate the underground development. You know, I guess last time you guys said you were looking at but hadn't made any decisions yet on potentially, you know, bringing in a, you know, a contractor or something to do additional development work. You know, with the capital raise you completed, are you in a position now where you, you know, financially could do that?
spk08: Yeah, Joel, it's Brad here. I think I can take that. As Clint mentioned, I mean, There's a direct linkage between our equipment availability and our advance rates. And just to give you, I guess, put it into context, our scoops, the underground loaders, have had an availability in the 35% range over the last couple of months where they really need to be in the 65% to 70% range. So certainly the supply chain and the shortage of underground mechanics has an impact on that. And to address that, we are currently in the process of leasing additional equipment, underground loaders specifically. They have not arrived at site yet, so they are on their way. So that will help increase our availability by having more units. And then in terms of the contractor, You know, we have used a contractor previously last year to try to supplement our advance rates, and quite honestly, I think the contractors are facing many of the very similar challenges that we do in terms of recruitment of mechanics and miners, and specifically the face miners. Those are the miners that can really do all of the tasks underground. Again, the focus is recruitment on mechanics and bringing in additional equipment to supplement our availability.
spk06: Okay, fair enough. And then, you know, recovery rates in the mill seem to be, you know, kind of a touch below plan, not tragically, but just slightly. Okay. Any ideas about, you know, will, you know, filling the mill solve that problem? Is it, you know, still a matter of ramping up and getting, you know, everything fine-tuned, you know, to different ore bodies? You know, just any additional color you can give there, you know, as far as expectations going forward.
spk08: Yeah, I mean, I guess two points to make on mill recovery. You know, certainly silver recovery is directly related to head grade in the mill. As our head grade continues to increase, the recoveries increase. It's just a trend that you can plot and see that directly. The other piece is more consistent runtime. As we have additional ore that feeds the mill, we can operate the mill longer rather than starting and stopping in shorter durations. You know, mills like to be fed a constant feed, and so both of those things together I think are contributing to the current recovery. I will say certainly our zinc recovery over the last couple months has been better than it has ever been, even back into the original Belkino days. So, again, and that's a direct reflection of increased zinc levels that we see from flame and moth.
spk06: Okay. Okay. Thanks. I'll turn it over.
spk01: The next question comes from Chen Lin with Lin Asset Management. Please go ahead.
spk04: Hi. Thank you for taking my questions. I noticed that you sold to Victoria the rights for banking. So with that additional $6 million, what is your working capital going forward, and do you see that sufficient to reach a cash flow positive? Thank you.
spk02: Yeah, thanks, Chen. So, yeah, with the monetization of the Banyan position, our current cash is right around 23 million bucks, And so, as I mentioned in my call, we are looking at various operating scenarios moving forward. And certainly, if we continue to see, you know, the type of improvement that we have here over the last couple months, there's going to be a lot less pressure But obviously we're continuing to look at all options. So it's a difficult one to forecast, to confidently forecast, Chen, because we need to get more run time under our belt to see continuation of these improvements to be able to nail when we see that point of cash self-sufficiency.
spk04: Okay, great. Thank you. How about the COVID situation? Is it completely lifted in Yukon?
spk02: It's much reduced than it was, you know, earlier in the first quarter, for sure. The first quarter, quite frankly, was, you know, it was a struggle. And that was initiated with the COVID situation. cases that we had, some of which were held over from December, but also a bunch of new ones in January.
spk04: Okay, thank you.
spk01: The next question is from Lauren Scherf with Raymond James. Please go ahead.
spk05: Hi, Clint and Brad. To follow up on the earlier solution that the leasing equipment was on the way, the second part of that was getting underground mechanics How tight is that market? What's your likelihood of attracting anyone? And what's the price of doing so in the market today? How much do we have to pay to entice people to come in?
spk08: Yeah, well, in terms of mechanics, again, just to put it into context, we probably are, on average, 65% to 70% filled up, if you will, of mechanics from where we really need to be. So in order to supplement that, we are using a number of contractors, multiple contractors. Some of them specialized in the equipment that we own, such as a bolter. But yes, it's very tight out there in terms of particularly on the underground mechanic side. So it's not all about wages. It's certainly camp conditions and those types of things It's a pretty mobile industry that we're in. So it's really trying to continue to recruit, retain, and then we're supplementing with contractors where they can help fill those gaps.
spk05: So if you're successful with bringing in a couple of contractors and the equipment is on the way, so let's say it's coming in this quarter, how soon is the ramp up to where you want to be if both of those things are successful?
spk02: Larry, this is Clint. It's sort of the same answer. We need to see continuation of the improvement that we've seen here in the last couple months. I'm a little loathe to speculate at this point until we get a little more time under our belt to be able to forecast exactly when that's going to be. I mean, as I mentioned, you know, we are looking at various cases, you know, upside and downside, and I can certainly, you know, assure you that in the middle and upside cases, then, you know, we're going to reach that point.
spk05: Okay. Thanks very much, guys. Appreciate it. Good luck.
spk01: Thanks, Larry. The next question is from Martin O'Malley with O'Malley Investments. Please go ahead.
spk03: In our last call, we talked about the first quarter head grades and how those were affected by the fact that we had some, I guess, a little more waste rock in our feed than we should have. What are the head grades looking like now? We're about halfway through the second quarter.
spk08: Yeah, we haven't released all the numbers, but certainly our April head grade is, I would say, 25% to 30% higher than Q1. And we're starting to see that same trend in May now as well. Just to give you a flavor, April head grades coming from the flame and moth mine were in excess of 700 grams per ton of silver. and over 650 grams per ton from the Birmingham mine. So we're certainly seeing that trend. You know, we've learned a lot at Birmingham in terms of our long hole drilling and blasting techniques. And at Flame and Moth, it's really about we're now, I guess, would be more in the heart of that 815 level rather than on the perimeter, on the outer edges of the 835 that we were in the first quarter.
spk03: In the call last, I guess, eight weeks ago, you all talked about you're just now getting into a couple of very good stopes. And I can't recall which those are, but I assume that that's continued. And these grades, you sound great for April. That's a big improvement.
spk08: Yeah. I mean, again, specifically at Flame and Moth, the first quarter, we were bad. primarily in what we call the 835 level. So that was higher in elevation, and you're on the perimeter. You're just on the very edges of that stope. But now that we are lower in the next level down, we are seeing more consistent higher grades from flame and moth. Thank you.
spk01: This concludes the question and answer session. I would like to turn the conference back over to Clint Nelman for any closing remarks.
spk02: Thank you, operator. And again, I just want to thank our shareholders for their patience and support of Alexco as we bring Keno Hill back into full production. Thank you very much.
spk01: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
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