Alexco Resource (TSX: AXU) appears to be having some difficulty in preparing its Keno Hill property in the Yukon for full scale production. The firm this morning revealed it is not only being forced to halt certain operations, but also that it needs additional funding if it wishes to obtain full scale production.
“As previously indicated in May, our operations ramp-up plan is running well behind schedule and 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 tpd and cash self sufficiency in 2022,” commented CEO Clynton Nauman.
While ramping of mining operations at the property continue to progress, Alexco has indicated that the progress to date is not enough to sustain operations. 5,750 tonnes of ore were milled during the month of May, with a total of 16 days of milling ops occurring. Of those, just nine days saw the company operate at full capacity of 400 tonnes per day.
With development behind schedule, the company has elected to suspend milling operations for at least five to six months, while it focuses on underground development. The current state of development does not provide for sufficient production to sustain capacities of 400 tpd, thus forcing the firm to focus on this aspect of its operations. 120,000 tonnes of ore is expected to be in inventory at the end of the year, allowing milling and ore extraction to resume operations in January 2023. The company as a result expects to be self sufficient on a cash basis in Q1 2023.
In terms of cash, the firm reportedly has just $14.0 million in the bank, and a negative working capital position of $4.5 million. Capital required to see the company through to self sufficiency in Q1 2023 is currently unknown by the company, with a review presently underway. Additional funding however is known to be required before the return to milling operations.
Alexco Resources last traded at $1.04 on the TSX.
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