Image source: The Motley Fool.
Alexco Resource (AXU)
Q1 2022 Earnings Call
May 13, 2022, 1:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Thank you for standing by. This is the conference operator. Welcome to the Alexco Resource Corp. first quarter 2022 results conference call.
[Operator instructions] I would now like to turn the conference over to Paul Jones, senior vice president, corporate development. Please go ahead.
Paul Jones -- Senior Vice President, Corporate Development
Good morning, ladies and gentlemen. Today is Friday, May 13, 2022. My name is Paul Jones, and I welcome you to the Alexco 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 alexcoresource.com later today.
Our website also contains our most recent news releases and our financial statements for the quarter ended March 31, 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 involve 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 SEDAR and EDGAR. I will now leave you with Clint Nauman.
Clint Nauman -- Chairman and Chief Executive Officer
Thank you, Paul. Good morning, good afternoon, and thank you to all those joining our call today. Given the volatile and changing -- 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 have 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% of the Q1 silver production being produced in March by 56,000 ounces, and these improvements continued through April where there's another 15% to 20% step-up in silver production.
In particular, we saw a bit of advance rates in the ramp at Birmingham, and an additional production level coming on stream 815 level at Flame & Moth. We have 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 2020 out of this release but we are deferring that until we have -- 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 tonne per day mill through. 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 along 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.
Questions & Answers:
Operator
Thank you. [Operator instructions] The first question is from Joseph Reagor with ROTH Capital Partners. Please go ahead.
Joseph Reagor -- ROTH Capital Partners -- Analyst
Hey, Clint and team. Thanks for taking my questions.
Clint Nauman -- Chairman and Chief Executive Officer
Hi, Joe.
Joseph Reagor -- ROTH Capital Partners -- Analyst
So, obviously, I've asked about this a little bit before on prior calls, but just want to follow up on it again. what can you guys do to kind of accelerate the underground development? I guess, last time you guys said you were looking at but haven't made any decisions yet on potentially bringing in contractor or something to do additional development work. With the capital raise you completed, are you in a position now where you financially could do that?
Brad Thrall -- President
Yeah, Joe. It's Brad. 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, 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.
So again, the focus is recruitment on mechanics and bringing in additional equipment to supplement our availability.
Joseph Reagor -- ROTH Capital Partners -- Analyst
OK, fair enough. And then recovery rates in the mills seem to be kind of a touch below land, not tragically, but just slightly. Any ideas about well filling the mill, solve that problem? Is it still a matter of ramping up and getting everything fine-tuned to different ore bodies? Just any additional color you can give there as far as expectations going forward.
Brad Thrall -- President
Yeah. I mean, I guess, two points to make on mill recovery. Certainly, silver recovery is directly related to head grade in the mill. So as our head grade continues to increase, the recoveries increased.
So I think if you -- it's just a trend that you can plot and see that directly. The other piece is more consistent run time. So as we have additional ore that feeds the mill, we can operate the mill longer rather than starting and stopping in shorter duration. So mills like to be fed at 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 of months has been better than it has ever been, even back into the original Belkino days. So again, that's a direct reflection of increased zinc levels that we see from Flame & Moth.
OK, thanks. I'll turn it over.
Operator
The next question comes from Chen Lin with Lin Asset Management. Please go ahead.
Chen Lin -- Chen Lin Asset Management -- Analyst
Hi. Thank you for taking my question. I noticed that you sold the Victoria, the rights for buying in. So with that additional $6 million what is your like working capital going forward? And then do you see that sufficient to reach cash flow positive? Thank you.
Clint Nauman -- Chairman and Chief Executive Officer
Yeah. Thanks, Chen. So yeah, with the monetization of the Banyan position, our current cash is right around $23 million. And so as I mentioned in my call, we are looking at various operating scenarios moving forward.
And certainly, if we continue to see the type of improvement that we have here over the last couple of months, there's going to be a lot less pressure. But we -- 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 sales sufficiency.
Chen Lin -- Chen Lin Asset Management -- Analyst
OK, great. Thank you. How about the COVID situation, is it completely lifted in Yukon?
Clint Nauman -- Chairman and Chief Executive Officer
It's much reduced than it was earlier in the first quarter for sure. The first quarter, quite frankly, was -- it was a struggle. And that was initiated with the COVID cases that we had, some of which were held over from December, but also a bunch of new ones in January.
Chen Lin -- Chen Lin Asset Management -- Analyst
OK, thank you.
Operator
The next question is from Lauren Scharf with Raymond James. Please go ahead.
Unknown speaker
Hi, Clint and Brad. Follow-up on the earlier solution of -- that the leasing equipment is 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 will you have to pay to entice people to come in?
Brad Thrall -- President
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 the bolter. But yes, it's very tight out there in terms of -- particularly on the underground mechanics 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 build those gaps.
Unknown speaker
So if you're successful with bringing in a couple of contractors and the equipment or it's 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?
Clint Nauman -- Chairman and Chief Executive Officer
Hey. Larry, this is Clint. I mean, it's sort of the same answer. We need to see continuation of the improvement that we've seen here in the last couple of months.
And I'm a little love to speculate at this point until we get a little more time under our belt to to be able to forecast exactly where that's going to be. I mean as I mentioned, we are looking at various cases, upside and downside, and I can certainly assure you that in the middle and upside cases, then we're going to reach that point.
Unknown speaker
OK, thanks very much guys. Appreciate it. Good luck.
Clint Nauman -- Chairman and Chief Executive Officer
Thanks, Lauren.
Operator
The next question is from Martin O'Malley with O'Malley Investments. Please go ahead.
Unknown speaker
Yes. 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 feet than we should have what are the head grades looking like now? We're about halfway through the second quarter.
Brad Thrall -- President
Yeah. Just to -- again, we haven't released all the numbers, but I mean, 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, I mean April head grades coming from the Flame & Moth mine were in excess of 700 grams per tonne of silver and over 650 grams per tonne from the Birmingham mine. So we're certainly seeing that trend.
We've learned a lot that Birmingham in terms of our long haul drilling and blasting techniques. And at Flame & 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.
Unknown speaker
In the call last, I guess, eight weeks ago, you all talked about the -- 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 sound great for April. That's a big improvement.
Brad Thrall -- President
Yeah. I mean, again, specifically Flame & Moth, the first quarter, we were primarily in what we call the 835 level. So that was higher in elevation and you're on the perimeter. You're on the -- 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 & Moth.
Unknown speaker
Thank you.
Operator
This concludes the question-and-answer session. I would like to turn the conference back over to Clint Nauman for any closing remarks.
Clint Nauman -- Chairman and Chief Executive Officer
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.
Operator
[Operator signoff]
Duration: 19 minutes
Call participants:
Paul Jones -- Senior Vice President, Corporate Development
Clint Nauman -- Chairman and Chief Executive Officer
Joseph Reagor -- ROTH Capital Partners -- Analyst
Brad Thrall -- President
Chen Lin -- Chen Lin Asset Management -- Analyst
Unknown speaker
