Alexco Resource Corp. (USA) (NYSEMKT:AXU) investors who have been with the stock since the end of 2015 and early 2016 were rewarded handsomely with gains of close to 300% in a matter of 3 months. AXU releases its earnings tomorrow which will likely be a huge improvement for the quarter and Full Year 2015. The stock ended the trading day with gains of 9% (or $0.09) to $1.09. It hit a new 52-week high with volume continuing to expand and eclipse its average daily volume in a meaningful manner.
The next stop for AXU really depends on earnings. If its results show significant improvement, profitability, and significant cash flow or operating cash flow; the stock should either consolidate or continuing its advance. At some point, the advance needs to consolidate for a few weeks and build a healthy base. See the chart below for a potential path for AXU.
In recent developments, the company recently raised equity financing of CAD $4 million. It was an a dilutive manner unfortunately, but still in indicator that accredited investors are bullish on the company’s overall strategy and believe in its success. AXU will need to deliver on its strategy for the stock to continue to advance. Otherwise the only other saving grace will be gold prices continue to climb. Mining companies are highly levered to gold prices which is both positive and negative. If gold prices were to fall, AXU would fall significantly faster.
AXU owns the Bellekeno silver mine, one of several mineral properties held by Alexco which encompass substantially all of the historical Keno Hill Silver District located in Canada’s Yukon Territory. Employing a unique business model, Alexco AXU provides mine-related environmental services, remediation technologies and reclamation and mine closure services to both government and industry clients through the Alexco Environmental Group, its wholly-owned environmental services division.
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AXU is currently trading at a $98 million market valuation. The company reports earnings for Fiscal Year 2015 and Fourth Quarter Results. AXU needs to show improvement in their topline or operating income for this rally to continue (at least a sustained rally with further gains in the future). Gold prices have buoyed the stock, but it could potentially fall significantly from these heights and the overbought territory AXU has entered.
We will be updating on AXU when more details emerge so make sure you are subscribed to Microcapspot so you know what’s going on with AXU.
Disclosure: we hold no position in AXU either long or short at the publication of this article and we have not been compensated for this article.
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