viewAlexco Resource Corp.

Stonecap Securities sees high grade focus for Alexco's Flame & Moth deposit, raises price target


Stonecap Securities analyst Christos Doulis Friday boosted his price target and kept his outperform rating on Alexco Resource Corp (TSE:AXR) (AMEX:AXU) a day after the company announced an updated resource estimate for its Flame & Moth deposit. 

The deposit lies within the Keno Hill Silver District in the Yukon. 

The global resource for Flame & Moth has increased to 23.9 million ounces of silver - what Doulis calls a significant increase over the previous resource estimate of 14.9 million ounces. 

In addition to the increase in contained ounces, the overall grade also increased 24% to 501 grams per tonne (g/t) silver, and 95% of the ounces are now in the indicated category - up from 74% previously. 

The report also highlighted that with a higher cut off grade of 500 g/t silver, the deposit has 515,000 tonnes in the indicated category grading 861 g/t silver, 0.62 g/t gold, 2.71% lead and 6.42% zinc. 

"This higher grade is in line with the ore that Alexco is currently mining and we believe will be the focus for future development," notes the analyst. 

Development work also continues at its Lucky Queen and Onek mines, and Alexco has now received the quartz mining license, waiting on a water license, which it expects to get in the near future. 

A resource update for its Bellekeno project is also expected this quarter. 

"With a number of catalysts expected in the near future, particularly production commencing at the Lucky Queen and Onek mines, we believe the current share price represents a good entry point," concludes Doulis. 

The analyst reflected the resource update at Flame & Moth in its valuation model. It had previously been modelling 759,000 tonnes grading 453 g/t silver, and is now modelling 515,000 tonnes at 861 g/t silver, as the capital markets firm believes Alexco will focus on the higher grade portion of the deposit for development. 

Doulis therefore raised his target price to $5.55 from $5.25 previously. Shares of the company in Toronto are currently changing hands at $4.59 - up 8% on the day. 

Quick facts: Alexco Resource Corp.

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