Q3 2021 Alexco Resource Corp Earnings Call

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Speaker 1: 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 and zero. I would now like to turn the conference over to Rajni Bala, Investor Relations and Communications Lead. Please go ahead.

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I'd now like to turn it over to Virgin Ebola Investor Relations and Communications. Please go ahead.

Thank you operator, good morning, ladies and gentlemen, today's Wednesday November 10, 2021, My name is Scott Schneeberger law and I welcome you to the lakes Cody because 2021 third quarter results conference call.

Speaker 2: Thank you, operator. Good morning, ladies and gentlemen. Today is Wednesday, November 10, 2021. My name is Rajnibala. And I welcome you to the Lexco Resource 2021 third quarter results conference call. This call is being webcast live and can be accessed through the events and webcast section of our website at LexcoResource.com. An audio archive of the call will be available later today.

This call is being webcast live and can be accessed to the events and webcast section of our website at <unk> Dot com and I'll do I'll tell you off the call will be available later today.

Oh, that's right also contains our most recent news release and our financial statements for the quarter ended September 30th 'twenty 'twenty. One all amounts mentioned today are in Canadian dollars unless otherwise indicated.

Speaker 2: Our website also contains our most recent news releases and our financial statements for the quarter ended September 30, 2021. All amounts mentioned today are in Canadian dollars unless otherwise indicated.

Our chairman and CEO Clint Nauman.

Speaker 2: Today, our Chairman and CEO , Clint Naumann, will discuss our most recent results. And he will be joined by our President, Brad Thraw, and our CFO , Mike Thraw, 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 laws.

This goes on mostly sensory cells and he will be joined by our president Brad Thrall and our CFO, Mike Goss do need a cushion or not the BDO.

Please be reminded that some statements made today may constitute forward looking information within the meaning of applicable securities laws.

Past performance discussed today is not indicative of future results.

Speaker 2: Past performance discussed today is not indicative of future results. Our business involves several risks that could cause the results to differ from the projections.

This involves several of this that could cause studies also differ from the projections.

Investors are encouraged to review the disclosures pertaining to risks that can be found in our most recent regulatory filings, but he thought available on our website and on SEDAR and Edgar and I will now leave you with Clint Nauman.

Speaker 2: Investors are encouraged to review the disclosures pertaining to risks that can be found in our most recent regulatory filings. These are available on our website and on CDOR and EDGAR. I will now leave you with Clint Naumann.

Thank you Rajeev.

Welcome and thank you to people that are on the phone this morning or this afternoon.

Speaker 3: Thank you, Rajni, and welcome and thank you to people that are on the phone this morning or this afternoon. And I just wanted to lead off by indicating that our third quarter result...

And I just wanted to lead off by indicating that our third quarter results.

Really a turning point.

Speaker 3: really, you know, our turning point, you know, in our mission to return Keno Hill, or the district, the silver district, to full production. And as you know, since last December , we've been processing what I would call salvage ore from the Belkino mine, while we continued underground development of our two new mines, which of course, form the bulk of the forward mine plan, and that is the Birmingham deposit and the Flaming Moth deposit.

You know in our mission to return Keno Hill well.

District, Silver district to full production.

As you know since last December we've been processing, so, but what I would call salvage all from the Belkin are mine, while we continued underground development about two new mines, which of course from the bulk of the forward mine plan and that is the bermingham deposit and the flame and moth deposit.

I'm pleased to report that mining and milling of the Bell.

Speaker 3: I'm pleased to report that mining and milling of the Belkino salvage ore was completed in October . And we are now focused entirely on our new ore bodies Birmingham and Flava Moss.

Alkene ourselves jaw was completed in October and we are now focused entirely on our new ore bodies, bermingham and flame and moth.

Just anecdotally at the end of the day, we mined about 24 and a half thousand tons from Bell Keno.

Speaker 3: Just anecdotally, at the end of the day, we mined about 24,500 tons from Belkino. That averaged 740 grams per ton silver and about 14% combined lead-zinc.

That averaged 740 grams per tonne silver.

And about 14% combined lead zinc.

Excuse me silver recovery was about 92% was better than 90.

Speaker 3: Silver recovery was about 92% with better than 90% of the silver going into the lead concentrate and through that with in excess of 500,000 ounces of silver contained in that concentrate.

Excuse me went better than 90% of the silver going into a lead concentrate whether it was in and through that.

So 500000 ounces of silver contained in that concentrate.

In the third quarter entirely minds more than 11000 tonnes of ore, whereas the majority about three quarters of it coming from volcano and our head grade in Q3 was on plan at 778 grams per tonne silver alarm was nearly 18% combined lead zinc.

Speaker 3: In the third quarter in total we mined more than 11,000 tons of ore with the majority, about three quarters of it coming from Belkino. And our head grade in Q3 was on plan at 778g per tonne silver along with nearly 18% combined lead zinc.

Our performance in the district, though it was also on plan in Q3, we saw a 70 275 tons of ore milled or about 162 tons per operating day.

Speaker 3: Our performance in the district mill was also on plan and Q3. We saw 7,275 tons of ore milled, or about 162 tons per operating day. Recoveries across all three metals continue to be very strong, with our team continuing to improve civil recoveries in particular.

Recoveries across all three metals continue to be very strong without team continuing to improve silver recoveries in particular.

No I must stress that while our total tons milled went down from the second quarter. This is largely due to the fact that we made the decision to not brand new high grade bermingham or with the Belgian at war.

Speaker 3: Now, I must stress that while our total tons milled were down from the second quarter, this is largely due to the fact that we made the decision to not blend the new high-grade Birmingham oar with the Belkino oar. Instead, we chose to stockpile nearly 2,500 tons of Birmingham oar and allow the mill to complete its run of Belkino oar.

We chose to stockpile that was 2500 tons of Bermingham.

Or allow the mill to complete its run of volcano or.

Excuse me. We also used this time to work on tying in the new ball mill and the two re grind mills, which will bring online to optimize concentrate quality and production from the new deposits. The high grade stockpile that we currently have it's over 950 grams per tonne silver is now being milled and this will help us allow us to test.

Speaker 3: We also use this time to work on tying in the new ball mill and the two re-grind mills, which we'll bring online to optimize concentrate quality and production from the new deposits. The high-grade stockpile that we currently have, it's over 950 grams per ton silver, is now being milled, and this will help allow us to test the mill at its eventual target rate of 400 tons per day this quarter.

The mill at its eventual target rate of 400 tonnes per day this quarter.

Silver production in the third quarter came in at over 173000 ounces, bringing our year to date production from development ore and Salvador to around 500000 ounces.

Speaker 3: Civil production in the third quarter came in at over 173,000 ounces, bringing a year-to-day production from development or, and salvage or, to around 500,000 ounces.

Looking ahead, we're now milling and mining ore from Bermingham and from all indications that work is proceeding well at flame and moth we continue to make good progress on the main decline. We have reached the first ore access level and a cross cutting to the or it's laying them off now and we will take our first round in a war that's laying them off this quarter.

Speaker 3: Looking ahead, we're now milling and mining ore from Birmingham, and from all indications, that work is proceeding well. At Flame and Moth, we continue to make good progress on the main decline. We've reached the first ore access level and are cross-cutting to the ore at Flame and Moth now, and we'll take our first rounds in ore at Flame and Moth this quarter.

The last remaining critical path item at flame and moth is the completion of the Allomap race, which once completed in early 'twenty two 2022.

Speaker 3: The last remaining critical path item at Flamomoth is the completion of the Alamak race, which once completed in early 2022 will allow us to sustainably deliver war to the mill, which when combined with activities of Birmingham will see us achieve our target of mill through on Monday. Now awareness movement 30 seconds more and the?

But allow us to sustainably deliver ore to the mill, which when combined with activities at Bermingham will see us achieve our targeted mill throughput level 400 tons per day.

Yeah.

Before I turn away from current operations I wanted to briefly discuss the topic that we get asked about a lot and for good reason.

Speaker 3: Before I turn away from current operations, I wanted to briefly discuss the topic that we get asked about a lot and for good reason. That being a working capital position. If Alexco has sufficient cash to see ourselves to free cash flow generation early next year.

That being our working capital position and <unk> has sufficient cash to see ourselves to free cash flow generation early next year.

This quarter saw a larger than normal drawdown on cash as we substantially finished all our P. P in <unk> spending.

Speaker 3: This quarter saw a larger than normal drawdown on cash as we substantially finished all our PP&E spending. We were investing and finalized their expiration program and we were operating in three mines. Excuse me additionally, as I noted earlier, we purposely delayed milling of the Birmingham War while we milled out the Belkino War.

We were investing and finalize their exploration program and we were operating in three mines.

Additionally, as I noted earlier, we purposely delayed milling of the Bermingham all while we build out the Belgian of war.

This really had the impact of delaying the revenue we would have otherwise realized this quarter, but we will now generate.

Speaker 3: This really had the impact of delaying the revenue. We would have otherwise realized this quarter, but we will now generate.

For the better part of the last year internally, we've been evaluating forecasting and monitoring our cash position.

Speaker 3: For the better part of the last year, internally we've been evaluating, forecasting and monitoring our cash position. And as we sit here today in November , I can tell you there were almost exactly where our internal plan had us at this time.

And as we sit here today in November I can tell you they were almost exactly where our internal plan had us at this time.

That's not to say, we don't still have some work ahead of us, but assuming we continue to deliver on up we continue to deliver on our plan like we have in the last few months I fully expect to see the cash balance start to grow in early 2022.

Speaker 3: That's not to say we don't still have some work ahead of us, but assuming we continue to deliver on up, we continue to deliver on our plan like we have in the last few months, I fully expect to see the cash balance start to grow in early 2022.

Additionally, we also have access to a new revolving credit facility, which is undrawn.

Speaker 3: Additionally, we also have access to our new revolving credit facility, which is undrawn.

Finally, I wanted to talk briefly about the work that's ongoing on the exploration front. We have finished drilling at Bermingham northeast Deep zone, where we completed nearly 18000 meters of drilling and which resulted in about 51 intercepts in the target zone.

Speaker 3: Finally, I want to talk briefly about the work that's ongoing on the exploration front. We have finished our drilling at the Birmingham Northeast Deep Zone, where we completed nearly 18,000 meters of drilling, which resulted in about 51 intercepts in the target zone.

We announced in September our interim interim results, which were very good.

Speaker 3: We announced in September our interim results, which were very good, as you likely know, with intercepts up to 16, 1700 grams over more than 20 meters.

As you likely know with interest within the steps up to.

16, 1700 grams over towards more than 20 meters actually.

And we define that as a result of all that and all of those into software defined an approximate 500 meter long sub horizontal mineralized zone with at least 100 meter vertical extent, that's proximal to our existing Bermingham reserve.

Speaker 3: And we defined as a result of all that and all those intercepts, we're defined an approximate 500 meter long subhorizonal mineralized zone with at least 100 meter vertical extent that's proximal to our existing Birmingham reserve.

We're now doing the work needed to turn those drill results into robust into a robust mineral resource, which will be completed by the end of the year.

Speaker 3: We're now doing the work needed to turn those drill results into a robust, into a robust, mineral resource, which will be completed by the end of the year.

And with that I'll ask the operator to open the call for questions.

Speaker 3: And with that, I'd like to last the operator to open the call for questions.

We will now begin the question answer session.

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Okay.

The first question comes from Jake <unk> from Alliance Global Partners. Please go ahead.

Speaker 1: The first question comes from Jake, Sikilski from Alliance Global Partners. Please go ahead.

Hey, guys. Thanks for taking my questions.

Just a quick question on the stockpile.

Speaker 4: Just a quick question on the stockpiled Velocino or during the quarter. You expect to blend that in over time or over the longer term, or is that something you think will process more near?

During the quarter, you expect a blend that in over time or over the longer term or is that something.

You think your process.

Yes.

Yeah, Hey, Jake it's Brad here.

Speaker 5: Yeah, I'd say, Jacob Brad here. Yeah, the stockpile ore was from Birmingham.

The stockpile ore was from Bermingham.

And and again that was an intentional decision I mean, the metallurgical characteristics are are slightly different at bermingham. So again, bill chemo or is fully process now and we are no milling bermingham or exclusively and.

Speaker 5: And again, that was an intentional decision. I mean, the metallurgical characteristics are slightly different at Birmingham. So again, Belkino-Or is fully processed now, and we are now milling Birmingham or exclusively.

And we would expect by the end of this year to draw down on that stockpile.

Speaker 5: and we would expect by the end of this year to draw down that stockpile.

Hum.

Speaker 5: to much lower levels by the end of this quarter.

Much lower levels by the end of this quarter.

Got it okay, so that'll probably come in.

Speaker 4: Okay, so that'll probably come in in the queue for advanced homework. That's right.

Into Q4 that sounds like.

That's right.

Okay, and then secondly on exploration I mean, I think that the big part of the story right now in the resource update are targeted for the end of this year.

Speaker 4: Okay, and then secondly on exploration, I mean, I think that's a big part of the story right now and the resource update targeted for the end of this year. Assuming it's positive, I mean, you guys still think we're looking at a mine plan update in the first half of next year on the back of that. And if so, you know, any color on timing of that. Yeah.

Hum.

I'm, assuming it's positive I mean, you guys were looking at.

Mine plan update in the first half of next year on the back of that and if so any color on that.

Yeah Jake.

Right now you know we've already got back about 48% of the assays in this zone.

Speaker 3: You know, right now, you know, we've only got back about 48% of the assays in this zone. But we are pretty confident that we're going to have everything backed by the end of November . And we're going to do our best to at least internally put together a new resource, or calculate the resource for that zone. And for Birmingham in general, excuse me, in December .

But we are pretty confident that we're going to have everything back by the end of November.

And we're going to do our best to.

At least internally put together, a new resource calculated resource for that zone.

And for Bermingham in general.

And in December.

Once we have that resource and assuming it's appropriate based on.

Speaker 3: Once we have that resource and assuming it's appropriate based on the tenor of that resource, we will proceed to look at the economic factors and whether or not it can be worked into a mine plan. So we absolutely, assuming we have the decent results from the drilling and the resource calculation, will move forward and produce a new mine plan as quickly as we can in 2020. Thank you.

The tenor of that resource. We will proceed to look at the economic factors and whether or not it can be worked into our mine plan. So we absolutely are assuming we have a decent results from the drilling.

And the resource calculation will move forward and produce a new mine plan.

Yes as quickly as we can in 2022.

Looking forward to that that's all on my end. Thanks again.

Thanks Jay.

Speaker 6: Thanks, Jake.

Once again, if you have a question. Please press Star then one.

Speaker 1: And once again, if you have a question, please press star, then one.

The next question comes from Mike <unk> Who's a from Roth Capital Partners. Please go ahead.

Speaker 1: The next question comes from Mike Niehuza from Roth Capital Partners. Please go ahead.

Hi, Clint.

Stepping in for Joe Reagor, who is unavailable.

Speaker 7: Hi, Clint. I'm stepping in for Joe Reeker, who is unavailable.

Congratulations on passing the turning point on just some closing comments on Bell you know it looks like you had some really nice grades over the commissioning process and I'm, just curious, though you're totally focused on bermingham and flame and moth.

Speaker 7: Congratulations on passing the turning point. Just some closing comments on Belkino. It looks like you had some really nice grades.

Speaker 7: over the commissioning process. And I'm just curious, Bill, you're totally focused on Birmingham and the Flamin' Moth, you know, milling out and you've milled out the final tons and you're done with that. Is there any further opportunity down the line for exploration at Belkino or is it just simply good night for that deposit?

You know million out and you build out the final tons and you're done with that is there any further opportunity down the line for exploration at at Bell Keno or is it just simply good night for that deposit.

No I mean, you know internally, where we're talking about that deposit I mean, we're still carry it.

Speaker 3: No, I mean, internally we're talking about that deposit. We will still carry it as to how we're going to carry it on our resource statement.

As to how we're going to carry it on our resource statement.

But I can you know I I.

I'm, the Blue Sky Guy right, but so I think that there is you know it is material at belkin are that we didn't go get that's above where we'd be mining with mostly being you know long hauling and in Bell Kino as you know relatively easy to get in cheap tonnes. There are a number of times you know, what we would call them.

Speaker 3: you know, I'm the blue sky guy, right? But so I think that there's, you know, there's material at Belkino that we didn't go get that's above.

Speaker 3: where we've been mining. We've mostly been long-hauling in in Belkino as you know relatively easy to get and cheap town.

Speaker 3: There are a number of times, you know, what we would call above the main haulage level there that we didn't go get. So, yeah, at some point in the future, you know, I would see us, you know, circling around and maybe going back to Belkino. But, you know, I don't see doing that in the next, you know, five to eight years. I don't think it's going to be out there.

The main haulage level there.

That that we didn't go get so yeah at some point in the future.

You know I would say I would see US you know circling around in and maybe going back to Bell Keno, but you know I don't see doing that in the next five to eight years I think it's going to be out there a ways.

So you're actually going to decommission the mine and have to re permit it and I guess also are is there any decommissioning issues like mine water that has to be dealt with or is it pretty clean.

Speaker 7: So you're actually going to then decommission the mine and have to repurmit it? And I guess also are is there any decommissioning issues like mine water that has to be dealt with or is it pretty clean?

Yeah, Hey, Mike Brad Your Hum the one comment on permitting and know that that mine remains fully permitted. So there's you know.

Speaker 5: Yeah, I'm like Brad here. You know the one comment permitting note that that mine remains fully permitted, so there's you know.

And what we would call temporary closure, but the permit is still in good standing even when you go into this into this phase.

Speaker 5: in what we would call temporary closure, but the permit is still in good standing even when you go into this phase. And we'll maintain the access to the mine. We've removed some of the assets that we can redeploy at the other two mines. And then in terms of water,

And we will maintain the access to the mine you know we'd remove some some of the assets that we can redeploy it at the other two mines.

And then in terms of water.

We will let the mine flood if you will and then next year, depending on the water quality, we may continue to have to treat it.

Speaker 5: We will let the mine flood, if you will, and then next year, depending on the water quality, we may continue to have to treat, but we'll see what the water quality looks like. But the water treatment plant remains available, and we can turn it back on next year.

But we'll see we'll see what the waterfall he looks like but the water treatment plant remains available and.

We can turn it back on next year.

Okay. Thank you you also you know we've got some really good metal prices I know that silver is kind of flat at a very good level, but also lead and zinc are up and I'm just curious.

Speaker 7: Okay, thank you. Also, we've got some really good metal prices. I know that silver is kind of flat at a very good level, but also lead and zinc are up. And I'm just curious with maybe with the levels of throughput through the mill. Do you think you might be able to make it without having to draw on that line of credit, the new line of credit that was put on?

With you know maybe with the levels of throughput through.

The mill.

Do you think you might be able to make it without having to draw on that line of credit the new line of credit that was put on.

Yeah. So yeah, I mean, that's what I was trying to address.

Speaker 3: Yeah, so that's what I was trying to address. You know, initially, Mike is that, you know, to date, we have been operating and comparing ourselves to, you know, a plan that we put together, I think back in May or June , and we're running right on target with that plan.

Initially Mike is that you know to date.

We have been operating in and comparing ourselves to.

Our plan that we put together I think back in May or June and we're running right on target with that plan.

You know, we're not quite there yet we still have you know like I say work to do but that plan would see us starting to accumulate crash in early 2022.

Speaker 3: You know, we're not quite there yet. We still have, like I say, work to do. But that plan would see us, you know, starting to accumulate crash in early 2022. So, you know, that's where we find ourselves at the present time. And for sure, we thought it was prudent to put that revolver in place. And it does provide, you know, does provide a question.

So you know that's you know that's where we that's where we find ourselves at the present time.

And for sure we thought it was prudent to put that revolver.

In place.

And it does provide you know does provide a cushion.

Okay.

Also it looks like over the last three quarters, you've accelerated the progress of underground development.

Speaker 7: Okay, also it looks like over the last three quarters you've accelerated the progress of underground development. I know it's been a tough year with COVID, but is there any secret sauce there that you have for doing that or is it just the release of an availability of resources?

I know, it's been a tough year with Covid, but is there.

Any secret sauce, there that you have for doing that or is it just the release Oh and availability of resources.

Well I think brad's, probably in a better position to answer that but I do let me just get my true sense in here first I mean, you know we bought on a new whole new undergrad, where we're self mining for those for most people are familiar with that so we are working on training our own.

Speaker 3: Well, I think Brad's probably in a better position to answer that. But let me just get my two cents in here first. I mean, we bought on a whole new underground. We're self-mining for those of us who are familiar with that. So we are working and training our own underground employees. We have dealt with a COVID pandemic. Now we have additional restrictions in Canada in terms of who can and can't go to work.

Employees.

We have dealt with a COVID-19 pandemic.

Now we have additional restrictions in Canada in terms of who can and can't go to work relative to the vaccination.

Speaker 3: relative to the vaccination state. You've got to be vaccinated to travel.

State, you're going to be vaccinated to travel.

On a commercial aircraft in Canada, sorry, I mean, all of those things sort of play into you know, what's happening underground bet and with that I'll turn it over to Brad for more of that.

Speaker 3: on a commercial aircraft in Canada.

Speaker 3: play into what's happening underground. And with that, I did turn it over to Brad for more of the skills and the improving performance.

Skills, and they are and the improving performance there.

Yeah, Mike I think.

Probably two main factors that you know we've been.

Speaker 5: Yeah, Mike, I think probably two main factors that you know, we've

<unk> steadily improving on and that's retention and recruitment of underground miners.

Speaker 5: been steadily improving on and that's retention and recruitment of underground miners. Really over the last probably two to three months, we're doing much better there in terms of again recruitment and equipment availability. Even though this is a fairly new mining fleet, again one of the challenges on recruitment has been underground mechanics.

<unk> really over the last probably two to three months.

Are doing much better there in terms of the.

Recruitment and equipment availability you know even though this is a fairly new mining fleet.

You know again, one of the challenges on recruitment has been underground mechanics again. This is an industry wide challenge that Ah.

Speaker 5: Again, this is an industry-wide challenge that I think most miners are facing. And again, we've made improvements there, so that directly translates into improved mechanical availability. So it's really continuing to focus on recruiting, training, and retention of our underground personnel.

I think most miners are in are facing.

Again, we've made improvements there so that directly translates into improved mechanical availability. So it's really.

Continuing to focus on recruiting training and retention of the underground personnel.

Great well, one I guess one last question on the.

Speaker 7: Great. One last question on the exploration. It's stunning to have a 1,700 gram

On the exploration I mean, it's it's stunning to have a 1700 gram.

<unk> silver intercept over 20 meters and I know that the the earlier.

Speaker 7: tons silver intercept over 20 meters and I know that the the earlier

Releases on the high grade at the North East Deep. We're we're also pretty amazing. So there's there is some variability as things pension swell I imagine but.

Speaker 7: releases on the high grade at the northeast deep were also pretty amazing. So there's some variability as things pinch and swell I imagine.

But are you are you starting to develop an idea of the the characteristics of the tenor of that potential new deposit as to whether it's yeah. There are challenges or is it going to be pretty straightforward for a long hole stoping or can you.

Speaker 7: But are you starting to develop an idea of the characteristics of the tenor of that potential new deposit as to whether there are challenges? Or is it going to be pretty straightforward for long-haul stoping? Can you comment about how that looks? Obviously it's large and it's going to be significant, but how is it shaping up?

Can you comment about kind of how that looks like it looks obviously, its large and it's going to be significant but how's that kind of shaping up.

You know I think the best way to answer that is that you know we've got more than 50 intercepts in this thing.

Speaker 3: You know, I think the best way to answer that is that, you know, we've got more than 50 intercepts in this thing. And, you know, I would say that for 90% of those, they, you know, were able to intercept that zone almost exactly where they predicted it to be. So, what that tells you is that it's a very consistent zone.

And you know I would say that for 90% of those they you know we're able to intercept that zone, almost exactly where they predicted it to be so what that tells you is that it's a very consistent zone.

It does you know it does vary a little in terms of strike and dip.

Speaker 3: It does, you know, it does vary a little in terms of strike and dip, you know, as you work your way up.

As you work your way along it.

But it's still a relatively steep zone.

Speaker 3: But it's still, you know, a relatively steep zone. It's about 100 meters from the top to the bottom.

It's about 100 meters from the top to the bottom of it if you like and it's in it's an elongated zone.

Speaker 3: of it if you like and it's an elongated zone.

And you know it has the same law.

Speaker 3: And you know it has the same, you know, looking at the core, I don't think it's fair to say, it has the same sort of characteristics as the majority of the...

Looking at the core I don't think I think it's fair to say it and it has the same sort of characteristics as the majority of the.

You know of the Bermingham or and as we have explained before you know it's high in silver and and and as we have you know in the results that we've announced and and relatively low in base metals and so yeah. That's that's what are the characteristics everything else I think needs to wait until we get all of these assays back in.

Speaker 3: of the Birmingham ore, and as we have explained before, you know, it's high in silver, and as we have, you know, in the results that we have announced, and relatively low in base metals. And so, yeah, they're sort of the characteristics. Everything else, I think, needs to wait until we get all of these assays back in.

Well I don't know you've really.

Drilled it tightly with the directional drilling and number of regs are is it could we might expect.

Speaker 7: drilled it tightly with the directional drilling and number of rigs, could we might expect the end....

At an indicated level are the resource or maybe some measured or how do you see that coming out yeah. I think it's gonna be indicated I mean that said that we we designed on the basis of indicated and that's why we did the directional drilling. So we could get those holes is exactly where we wanted them working with our independent engineer in Q piece.

Speaker 7: at an indicated level, the resource, or maybe some measured? How do you see that coming out? I think it's going to be indicated. We designed on the basis of indicated, and that's why we did the directional drilling so we could get those holes exactly where we wanted them, working with our independent engineer and QPs. I'm hoping for it's going to be mostly an indicated category.

Yeah, I'm, hoping for.

It's going to be mostly an indicated category.

Okay. Thank you very much.

The next question comes from Nicholas Dion from Comox Securities. Please go ahead.

Speaker 1: The next question comes from Nicholas Dion from Comark Securities. Please go ahead.

Okay.

Hi, guys. Congrats on the progress, you're making I'm, sorry, I missed the call.

Speaker 8: Hi, guys. Congrats on the progress you're making. Sorry, I missed the call.

A bit late so sorry, if I'm being repetitive, but I just wanted to ask him. If he could I guess add any commentary on how bermingham is going now that you're both mining and processing ore from there and then secondly, I was wondering.

Speaker 8: bit late so sorry if I'm being repetitive but I just wanted to ask if you could I guess add any commentary on how Birmingham is going now that you're both mining and processing ore from there and then secondly I was wondering you know what if any specific impacts the recent new COVID restrictions in the Yukon have on your operation thanks

You know what if any specific impacts every cent a new COVID-19 restrictions I mean, you can have on your operation.

Yes.

Brad or I can take that one.

The Bermingham first I mean, we've got a really two main activities happening at Bermingham, we have the main ramp decline.

Speaker 5: Birmingham first, I mean we've got really two main activities happening at Birmingham we have the main ramp decline.

That's progressing.

And then we are mining ore on what we call. The 11 50 level and that is our first us you'll still drive on the cut and fill and that's nearly complete we have about 20 meters left and then when that is complete we will start pulling long holes and retreat back out of that drive that's about 150 meter long drives so that'll be.

Speaker 5: that's progressing. And then we are mining ore on what we call the 1150 level. And that is our first, you know, sill drive on the cut and fill. And that's nearly complete. We have about 20 meters left. And then when that is complete, we'll start pulling long holes and retreat back out of that drive. That's about a 150 meter long drive. So that'll be our primary ore source really for the next couple of months.

Our primary ore source really for the next couple of months.

Until we reach the the really high grade material at Bermingham, which is at 11 20 level.

Speaker 5: until we reach the really high-grade material at Birmingham, which is at the 1120 level. And we've got about 125 meters remaining in that ramp to reach that 1120 level access.

We've got about 100 and.

About 125 meters remaining in that ramp to reach that 11 20 level access.

In terms of Covid. So it's a great question on the travel.

Speaker 5: In terms of COVID, it's a great question on the travel. I think everybody understands the new rules, the mandate in Canada, in terms of vaccination requirements. We have seen a minor impact, I would term it, in the last couple of weeks now that this has come in place.

You know I think everybody understands that the new rules or the mandate in Canada.

In terms of vaccination requirements, we have seen it.

A minor impact I would term it in in the last couple of weeks now that this has come in place.

You know at site I mean, our employees at site, where just over 90%.

Speaker 5: At site, I mean our employees at site, we're just over 90% vaccination rate at Kino Hill, which is I think very good. So it's going to have a small impact on some employees that are unable to travel, but certainly in I think the shorter, more medium term, we don't see a significant impact. But again, we are seeing some increased cases in the Yukon.

Vaccination rate at Keno Hill, which is I think very good so.

It's gonna have a I think a small impact on you know some employees that are that are unable to travel but.

Certainly in the I think the shorter.

More medium term, we don't see a significant impact but again you know we are seeing some increased cases in the Yukon.

We continue to just be very diligent on our health and safety protocols at site.

Speaker 5: We continue to just be very diligent on our health and safety protocols at site.

Okay. Thanks for that that's it for me.

The next question comes from Ken peso private Investor. Please go ahead.

Speaker 1: The next question comes from Kent Spissau, private investor. Please go ahead.

Thank you.

Gentlemen.

Speaker 9: Thank you. Good morning, gentlemen. I'm in BC. My question is more related to the overall picture of the company and is forward looking in terms of the size of the land package.

Let me see.

My question.

It's more related to the overall picture of the company.

Forward looking in terms of the size of the land package.

The exploration I want to compliment you all.

Speaker 9: and the exploration I want to compliment you all.

Hum how fast you're bringing this mine to fruition with the line.

Speaker 9: on how fast you're bringing this mine to fruition with the mines of Birmingham and Flemont Waugh. What your plans are for future exploration and development of the overall package of the mine.

The lines, the bermingham and flame and moth, but what your plans are for future exploration and development of the year.

Overall package.

Property.

Yeah, I mean, that's a it's a it's a great question.

Speaker 3: Yeah, I mean, that's a great question. As a small company, we've sort of fallen in the trap of, it's a good news story, obviously. I mean, we've found a couple of deposits here, blind discoveries, and put 70, 75 million ounces on the books. And those ounces are now going into production. But for the last five or six years, and we've focused 95% of our attention on those two deposits.

As a small company, we have sort of falling into the trap of.

It's a good it's a good news story, obviously I mean, we've found a couple of deposits here blind discoveries.

And put you know 70 to 75 million ounces on the books and those ounces are now going into production, but for the last five or six years. I mean, we're focused you know 95% of our attention on those two deposits.

The district itself is you know.

Speaker 3: The district itself is 30 odd kilometers long and 15, 20 kilometers wide. And mineralization, silver mineralization occurs over the entire district.

Is 30 odd kilometers long and 15 20 kilometers wide.

And mineralization silver mineralization occurs over the entire district. So we really have only looked at a very small portion of the district.

Speaker 3: So we really have only looked at a very small portion of the distance.

Flip side is that we have done enough detailed work in and around these new deposits that we have a much better.

Speaker 3: The flip side though is that we have done enough detailed work in and around these new deposits that we have a much better

Technical understanding of the geological architecture, that's required to produce these larger and higher grade deposits.

Speaker 3: technical understanding of the geological architecture that's required to produce these larger and higher grade deposits.

So in 2022.

Speaker 3: So in 2022, we don't have any plans finalized yet, but we will undertake more of a reconnaissance type of an exploration program.

You know we don't have any.

Plans finalized yet, but we will undertake no.

More of a reconnaissance type of an exploration program, saying, if we can one find you know proxies or Sim.

Speaker 3: seeing if we can one, find proxies or similar geological settings to the ones that host the flame of moth in the Birmingham deposit. And secondly, just see if we can get a better understanding of the metal distribution in the district.

Similar geological.

Geological settings to the ones that hosts the front they are the flame and moth in the Bermingham deposit.

And secondly, just see what the if we can get a better understanding of the metal distribution in the district I mean, it's quite noticeable that you know some of these deposits like the volcano deposit for example, you have a lot of lead and zinc associated with them.

Speaker 3: It's quite noticeable that some of these deposits like the Belkino deposit for example, have a lot of lead and zinc associated with them and the silver occurs with the lead in the actual lead minerals. Other deposits like the ones that we have found here more recently are very high grade silver with lower base metals associated and we don't understand exactly why that is.

And the silver occurs in the in with with the with the land.

And the actual lead minerals either deposits like the ones that we have found here more recently.

A very high grade silver with lower base metals associated and we don't understand exactly why that is.

But you can be sure that theres going to be a series of deposits. This is a blue sky statement of course, that's going to that's going to fit within that spectrum, and you know and and where we're only just getting started on that work. So yeah, we're pretty excited and looking forward here. It's a it's a big district, there's lots of targets.

Speaker 3: But you can be sure that there's going to be a series of deposits, this is a blue sky statement of course, that's going to fit within that spectrum.

Speaker 3: And, you know, and we're only just getting started on that work. So, yeah, we're pretty excited looking forward here. It's a big district. There's lots of targets. And we're going to start sort of, you know, seeing if we can start ranking those in effect with some kind of a reconnaissance program in 2022. Thank you. That's all I have.

And we're gonna start sort of seeing if we can start ranking knows.

In fact, with some kind of a reconnaissance program in 2022.

Thank you that's all I have.

Okay.

This concludes our question and answer session I would like to turn the conference back over to Clint Nauman, Chairman and CEO for any closing remarks.

Speaker 1: I'd like to turn the conference back over to Clint Norman, Chairman and CEO of Fannie, closing them off.

Thank you operator, I look forward to keeping you updated on our progress as we get closer to commercial production in 2022 and I. Thank our shareholders for their continued support and their confidence in our team.

Speaker 3: Thank you, operator. I look forward to keeping you updated on our progress as we get closer to commercial production in 2022. And I thank our shareholders for their continued support and their confidence in our team. Thank you.

Thank you.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

Speaker 1: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day. plays

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