Alexco Resource: A Cheap, Unlevered and Near Term Silver Producer

Thesis

Alexco (AXU) has by dint of history full ownership over one of the most prolific silver producing regions in Canada. It is funded to get to production and has no debt. AXU is a very clean, simple story, enabling the investor to have full access to a cheap, unlevered silver near-term to be producer. AXU will be producing as a low-cost producer in a well-proven high grade area.

AXU can be divided into two distinct parts:

1. Consulting and remediation business which does about $6m per year and is profitable.
2. Exploration and production company in an area which has full ownership of Keno Hill an area roughly 18 miles long by 12 miles wide. The mining is to be done by conventional flotation and the area is on the electric grid.

History of Keno Hill

Keno Hill and its entities were forced into government receivership in 1989. Burdened by environmental liabilities, the property sat abandoned, though significant resources remained at grades far in excess of most of the world’s primary silver producers. Keno Hill. According to the Yukon Govt databases 1913 and 1989, the Keno Hill Silver District produced more than 217 million ounces of silver (5.37 million tons) with average grades of 40.52 oz/ton silver, 5.62% lead and 3.14% zinc, making it the second-largest historical silver producer in Canada. The silver grade at Keno Hill is in the top 3% of all global silver producers.

In June 2005, Alexco was selected as the preferred purchaser of the assets of all of the United Keno mines. In December 2007, following receipt of necessary permits and approvals, the Yukon Government approved final close of the purchase agreement, giving Alexco 100% ownership of the assets. Alexco has no liability to the environmental issues (and is being paid by the government to clean it up) and has no undertaking to spend any amount of exploration dollars.

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