6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2020. Commission File Number 001-33621

ALEXCO RESOURCE CORP.

(Translation of registrant's name into English)

Suite 1225, Two Bentall Centre

555 Burrard Street, Box 216

Vancouver, BC V7X 1M9 Canada

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F o Form 40-F ý

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): []

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): []

SUBMITTED HEREWITH

Exhibit
99.1	Interim Condensed Consolidated Financial Statements for the Three Month Periods Ended March 31, 2020 and 2019
99.2	Management’s Discussion and Analysis for the Three Month Period Ended March 31, 2020
99.3	Form 52-109F2 - Certification of Interim Filings - Full Certificate - CEO
99.4	Form 52-109F2 - Certification of Interim Filings - Full Certificate - CFO

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		ALEXCO RESOURCE CORP.
		(Registrant)
	By:	/s/ Mike Clark
Date: May 14, 2020		Mike Clark Chief Financial Officer

EX-99.1

Exhibit 99.1

 

ALEXCO RESOURCE CORP.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED

MARCH 31, 2020 AND 2019 (unaudited)

ALEXCO RESOURCE CORP.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT MARCH 31, 2020

(unaudited - expressed in thousands of Canadian dollars)	Note		March 31  2020		December 31 2019
Current Assets
Cash and cash equivalents		5	$	22,308	$	6,841
Accounts and other receivables				2,389		6,534
Investments		7		219		405
Inventories				1,140		1,285
Prepaid expenses and other				665		652
				26,721		15,717
Non-Current Assets
Restricted cash and deposits		6		3,108		2,777
Investments		7		509		924
Inventories				4,282		4,282
Property, plant and equipment		8,12		14,294		16,048
Mineral properties		9		91,482		89,507
Embedded derivative asset		10		23,257		15,160
Other assets				—		938
Total Assets			$	163,653	$	145,353
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities		11	$	3,259	$	5,143
Lease liabilities		12		178		406
Environmental services contract loss provision				65		78
Deferred revenue				41		884
Flow-through share premium pending renunciation				118		205
				3,661		6,716
Non-Current Liabilities
Lease liabilities		12		871		1,040
Decommissioning and rehabilitation provision		13		6,517		6,202
Deferred income tax liabilities				5,796		4,725
Total Liabilities				16,845		18,683
Shareholders' Equity				146,808		126,670
Total Liabilities and Shareholders' Equity			$	163,653	$	145,353
COMMITMENTS		22

APPROVED ON BEHALF OF

THE BOARD OF DIRECTORS

“Terry Krepiakevich”	“Elaine Sanders”
(signed)	(signed)
Director	Director

The accompanying notes are an integral part of these interim condensed consolidated financial statements

Alexco Resource Corp. |  1  

ALEXCO RESOURCE CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTH PERIODS ENDED MARCH 31

(unaudited - expressed in thousands of Canadian dollars, except per share and share amounts)
	Note			2020			2019
Revenues
Reclamation management revenue				567			290
Cost of Sales
Reclamation management costs				540			317
Total Gross Profit (Loss)				27			(27	)
Expenses
General and administrative expenses		15		1,808			2,668
Mine site care and maintenance		16		813			624
				2,621			3,292
Operating Loss				(2,594	)		(3,319	)
Other Income (Expenses)
Other income and expenses		17		(16	)		(233	)
Gain on embedded derivative		10		8,097			5,482
Income Before Taxes				5,487			1,930
Income Tax Provision
Deferred				770			562
Net Income from Continued Operations				4,717			1,368
Discontinued Operations
Income (loss) net of tax from discontinued operations		4		7,336			(161	)
Net Income				12,053			1,207
Other Comprehensive Loss
Loss on FVTOCI investments, net of tax				(569	)		(83	)
Items that may be reclassified subsequently to net loss
Cumulative translation adjustments, net of tax				—			(59	)
Other Comprehensive Loss				(569	)		(142	)
Total Comprehensive Income			$	11,484		$	1,065
Basic and diluted income per common share
Continuing operations			$	0.04		$	0.01
Discontinued operations			$	0.06		$	—
Weighted average number of common shares outstanding
Basic				120,144,234			108,380,955
Diluted				122,589,115			110,498,164

The accompanying notes are an integral part of these interim condensed consolidated financial statements

Alexco Resource Corp. |  2  

ALEXCO RESOURCE CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTH PERIODS ENDED MARCH 31

(unaudited - expressed in thousands of Canadian dollars)
	2020				2019
Cash Flows used in Operating Activities
Net income from continuing operations	$	4,717		$	1,368
Items not affecting cash from operations:
Environmental services contract loss provision		(14	)		4
Depreciation of fixed assets and right-of-use assets		399			400
Amortization of intangible assets		3			2
Share-based compensation expense		418			1,119
Finance costs, foreign exchange and other		(75	)		(111	)
Derivative asset gain		(8,097	)		(5,482	)
Unrealized loss on investments		32			15
Deferred income tax provision		770			562
Changes in non-cash working capital balances related to operations
(Increase) decrease in accounts and other receivables		(2,026	)		118
(Increase) decrease in inventories		(18	)		37
Increase (decrease) in prepaid expenses and other current assets		(214	)		271
Increase in deferred revenue		(68	)		—
Increase in accounts payable and accrued liabilities		1,162			278
Cash used in operating activities from continuing operations		(3,011	)		(1,419	)
Cash from operating activities from discontinued operations		417			775
Cash used in operating activities		(2,594	)		(644	)
Cash Flows (used in) from Investing Activities
Expenditures on mineral properties		(1,866	)		(1,427	)
Purchase or disposal of property, plant and equipment		(136	)		(19	)
Increase in restricted cash		(392	)		—
Proceeds from sale of discontinued operations		12,100			—
Purchase of investments		—			—
Cash (used in) from investing activities from continuing operations		9,706			(1,446	)
Cash (used in) from investing activities from discontinued operations		(40	)		—
Cash (used in) from investing activities		9,666			(1,446	)
Cash Flows from (used in) Financing Activities
Proceeds from issuance of shares		8,626			—
Issuance costs		(863	)		—
Repayment of lease liabilities		(71	)		(71	)
Proceeds from exercise of stock options		406			59
Cash (used in) from financing activities from continuing operations		8,098			(12	)
Cash (used in) from financing activities from discontinued operations		(40	)		(82	)
Cash (used in) from financing activities		8,058			(94	)
Decrease in Cash and Cash Equivalents		15,130			(2,877	)
Change of Cash of Discontinued Operations		337			693
Cash and Cash Equivalents - Beginning of Period		6,841			8,576
Cash and Cash Equivalents - End of Period	$	22,308		$	6,392
SUPPLEMENTAL CASH FLOW INFORMATION (see note 19)

The accompanying notes are an integral part of these interim condensed consolidated financial statements

Alexco Resource Corp. |  3  

ALEXCO RESOURCE CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(unaudited - expressed in thousands of Canadian dollars)

	Common Shares
		Number of Shares		Amount		Warrants		Share Options, DSU's and RSU's			Contributed Surplus		Accumulated Deficit			Accumulated Other Comprehensive Loss		Total
Balance - December 31, 2019		119,150,667	$	229,112	$	1,560	$	8,645		$	19,348	$	(130,713	)	$	(1,282	)	$126,670
Net income		—		—		—		—			—		12,053			—		12,053
Other comprehensive loss		—		—		—		—			—		—			(569	)	(569)
Share-based compensation expense recognized		—		—		—		488			—		—			—		488
Equity Offering, net of issuance costs		4,662,675		7,761		—		—			—		—			—		7,761
Exercise of share options		592,333		605		—		(200	)		—		—			—		405
Share options forfeited or expired		—		—		—		(1	)		1		—			—		-
Release of RSU settlement shares		251,664		354		—		(354	)		—		—			—		-
Balance - March 31, 2020		124,657,339	$	237,832	$	1,560	$	8,578		$	19,349	$	(118,660	)	$	(1,851	)	$146,808
Balance - December 31, 2018		107,998,902	$	212,903	$	2,494	$	5,841		$	18,906	$	(121,798	)	$	(1,716	)	$116,630
Net income		—		—		—		—			—		1,207			—		1,207
Other comprehensive loss		—		—		—		—			—		—			(142	)	(142)
Share-based compensation expense recognized		—		—		—		1,229			—		—			—		1,229
Credit Facility fee - Shares		171,480		211		—		—			—		—			—		211
Exercise of share options		90,000		89		—		(29	)		—		—			—		60
Share options forfeited or expired		—		—		—		(442	)		442		—			—		0
Release of RSU settlement shares		386,655		625		—		(625	)		—		—			—		0
Balance - March 31, 2019		108,647,037		213,828		2,494		5,974			19,348		(120,591	)		(1,858	)	119,195

The accompanying notes are an integral part of these interim condensed consolidated financial statements

Alexco Resource Corp. |  4  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

1. Description of Business and Nature of Operations

Alexco Resource Corp. (“Alexco” or the “Corporation”) was incorporated under the Business Corporations Act (Yukon) on December 3, 2004 and commenced operations on March 15, 2005. Effective December 28, 2007, it was continued under the Business Corporations Act (British Columbia). The Corporation operates a mining business, comprising mineral exploration and mine development in the Yukon Territory of Canada. Since inception the Corporation has also operated a subsidiary environmental services business “AEG”. During the quarter the Corporation entered into a share purchase agreement (the “AEG Sale Agreement”) for the sale of Alexco Environmental Group (“AEG”), a business, providing consulting, remediation solutions, and project management services in respect of environmental permitting and compliance and site remediation, primarily in Canada and the United States (refer to Note 4).

The Corporation is in the process of exploring and developing its mineral properties. The recoverability of the amounts shown for mineral properties is dependent upon the existence of economically recoverable mineral resources or reserves, successful permitting, the ability of the Corporation to obtain necessary financing to complete exploration and development, and upon future profitable production or proceeds from disposition of each mineral property. The carrying amounts of mineral properties are based on a disposal of part of a mineral property interest, costs incurred to date, adjusted for depletion and impairments and do not necessarily represent present or future values.

Alexco is a public company which is listed on the Toronto Stock Exchange and the NYSE American Stock Exchange (under the symbol AXU). The Corporation’s corporate head office is located at Suite 1225, Two Bentall Centre, 555 Burrard Street, Box 216, Vancouver, BC, Canada, V7X 1M9.

2. CRITICAL JUDGEMENTS AND MAJOR SOURCES OF ESTIMATION UNCERTAINTY

In preparing Alexco’s consolidated financial statements, the Corporation makes judgments in applying its accounting policies. The areas of policy judgment are consistent with those reported in Alexco’s 2019 annual consolidated financial statements. In addition, the Corporation makes assumptions about the future in deriving estimates used in preparing its consolidated financial statements. As disclosed in Alexco’s 2019 annual consolidated financial statements, sources of estimation uncertainty include estimates used to determine the recoverable amounts of long-lived assets, recoverable reserves and resources, the provision for income taxes and the related deferred tax assets and liabilities and the valuation of other assets and liabilities including decommissioning and restoration provisions.

• COVID-19

In March 2020, the World Health Organization declared a global pandemic related to COVID-19. The current and expected impacts on global commerce are anticipated to be far-reaching. To date there have been significant stock market declines and volatility, significant volatility in commodity and foreign exchange markets, restrictions on the conduct of business in many jurisdictions and the global movement of people and some goods has become restricted. There is significant ongoing uncertainty surrounding COVID-19 and the extent and duration of the impacts that it may have on demand and prices for the commodities that Alexco intends to produce, on Alexco’s suppliers, on Alexco’s employees and contractors and on global financial markets.

During the quarter ended March 31, 2020, the Corporation made efforts to safeguard the health of its employees, while continuing to operate safely and maintaining essential business activity. In addition, in late March 2020, to support public health efforts in the Yukon, and in consideration of the uncertainty caused by the COVID-19 pandemic as previously dscribed, the Corporation suspended underground development of the Flame & Moth and Bermingham deposits at Keno Hill. Costs to maintain the site and contractors on standby and other costs associated with a potential restart of development activities will be expensed in future periods.

These measures combined with commodity market fluctuations resulting from COVID-19 have affected the results through the embedded derivative resulting in a gain of $8,097,000 durig the quarter ended March 31, 2020. While commodity prices have declined in U.S. dollar terms; Alexco’s operations located in Canada have benefited from the weakening of the Canadian currency relative to the U.S. dollar. Assumptions about future commodity prices, exchange rates, and interest rates are subject to greater variability than normal, which could in future significantly affect the valuation of Alexco’s assets, both financial and non-financial.

Alexco Resource Corp. |  5  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

• Discontinued operation

Management’s judgment was required in assessing whether the sale of the subsidiary environmental business meets the criteria to be presented as a discontinued operation. Considerations included: whether there were separately identifiable operations from the remaining operations of the Corporation, and whether there are cash flows that can be distinguished. Management also noted that there are no remaining environmental consulting services performed by Alexco and that the subsidiary environmental business reported their separate financial results and cash flows to management and the board of directors and the chief operating decision maker of the Corporation. Management concluded that the subsidiary environmental business was a component that represents a separate major line of business and has accordingly applied the presentation for a discontinued operation.

3. Basis of Preparation and Statement of Compliance

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. These interim financial statements follow the same accounting policies and methods of computation as compared with the most recent annual financial statements, being for the year ended December 31, 2019, which were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Accordingly, these interim financial statements should be read in conjunction with the Corporation’s most recent annual financial statements. These interim condensed consolidated financial statements were approved for issuance by the Board of Directors on May 13, 2020.

These consolidated financial statements have been prepared on a going concern basis, under the historical cost method, except for derivative financial instruments, share-based compensation and certain financial assets which have been measured at fair value. All figures are expressed in Canadian dollars unless otherwise indicated.

4. Disposition of Subsidiary Business, AEG

On February 14, 2020 the Corporation entered into the AEG Sale Agreement for the sale of AEG, to AEG’s executive management. The Corporation has owned and operated the environmental services business, as well as Elsa Reclamation and Development Company Ltd. (“ERDC”), with both businesses providing environmental services to its clients. ERDC is specifically retained by the Federal Government of Canada as a paid contractor responsible on a continuing basis for the environmental care and maintenance and ultimate closure and reclamation of the former United Keno Hill Mines (“UKHM”) mineral properties. ERDC and AEG are separately identifiable entities that have their own operations and cashflows that allow them to be distinguished from each other. Upon entering the AEG Sale Agreement, the Corporation considered AEG to be a disposal group held-for-sale and a discontinued operation. The Corporation recorded a gain on disposal of $8,030,000. Under the terms of the AEG Sale Agreement, AEG’s executive management purchased all of the shares of AEG in consideration for payment to Alexco of $13,350,000. On February 14, 2020 Alexco received $12,100,000 in cash, with the balance of $1,250,000 receivable pursuant to a non-interest bearing promissory note that matures on February 14, 2021.

The carrying amounts of assets and liabilities included in the disposal group are as follows:

Alexco Resource Corp. |  6  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

	March 31 2020		December 31 2019
Cash and cash equivalents Accounts and other receivables Inventories Prepaid expenses Property, plant and equipment	$	— — — — —	$	348 6,021 162 200 1,638
Other assets		—		935
Assets of disposal group	$	—	$	9,304

	March 31 2020		December 31 2019
Accounts payable and accrued liabilities Lease liabilities	$	— —	$	1,767 356
Deferred revenue		—		775
Liabilities of disposal group	$	—	$	2,898

The net income (loss) reported in discontinued operations for the three month periods ended March 31, 2020 and 2019 is presented as follows:

	2020		2019
Environmental Services Revenue Environmental Services Costs General and administrative expenses Deferred tax expense on sale of discontinued operations	$	2,207 (1,424) (1,263) (214)	$	6,952 (5,444) (1,669) —
Gain on sale of discontinued operations		8,030		—
Income (loss) after tax from discontinued operations	$	7,336	$	(161	)

Alexco Resource Corp. |  7  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

5. Cash and Cash Equivalents

	March 31 2020		December 31 2019
Cash at bank and on hand	$	21,778	$	6,313
Short-term bank deposits		530		528
	$	22,308	$	6,841

6. Restricted Cash and Deposits

	March 31 2020		December 31 2019
Security for decommissioning obligations	$	3,009	$	2,611
Other		99		166
	$	3,108	$	2,777

Security for decommissioning obligations includes cash collateral and a surety bond representing security for future reclamation and closure activities for the Bellekeno, Bermingham, Flame & Moth, Lucky Queen and Onek deposits. During the quarter, the Corporation increased the cash collateral posted for security by $392,000.

7. Investments

	March 31 2020		December 31 2019
Common shares held	$	720	$	1,289
Warrants held		8		40
Total investments		728		1,329
Less: current portion		219		405
	$	509	$	924

As of March 31, 2020, the Corporation held 11,136,644 common shares of Banyan Gold Corp. (“Banyan”) (December 31, 2019 - 11,136,644) and 995,500 common shares of Golden Predator Mining Corp. (“Golden Predator”) (December 31, 2019 - 995,500). As of March 31, 2020, the Corporation also held 2,780,822 warrants of Banyan (December 31, 2019 - 2,780,822) with exercise prices of both $0.15 and $0.09 and expiry dates of July 19, 2020 and April 19, 2021. The Corporation also held 300,000 warrants of Golden Predator (December 31, 2019 - 300,000) with an exercise price of $1.00 per share and an expiry date of December 21, 2020.

During the quarter ended March 31, 2020, the Corporation recorded a pre-tax loss on investments of $32,000 (2019 - $14,000) on warrants held in Banyan and Golden Predator. The Corporation also recorded in other comprehensive income a fair value loss adjustment, net of tax of $569,000 (2019 - $83,000) on common shares held in Banyan and Golden Predator.

Alexco Resource Corp. |  8  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

8. Property, Plant and Equipment

Cost	Land and Buildings		Camp, Roads, and Other Site		Ore Processing Mill		Heavy Machinery and Equipment			Leasehold Improvements & Other			Total
December 31, 2019	$	1,709	$	5,584	$	23,256	$	10,312		$	1,503		$	42,364
Additions		—		—		—		224			—			224
Disposal of AEG								(2,212	)		(427	)		(2,639	)
Change of estimate in decommission provision		—		—		146		—			—			146
March 31, 2020	$	1,709	$	5,584	$	23,402	$	8,324		$	1,076		$	40,095

Accumulated Depreciation	Land and Buildings		Camp, Roads, and Other Site		Ore Processing Mill		Heavy Machinery and Equipment		Leasehold Improvements & Other		Total
December 31, 2019	$	507	$	5,022	$	12,620	$	8,061	$	1,456	$	27,666
Depreciation		19		38		295		131		7		490
Disposal of AEG		—		—		—		(977)		(397)		(1,374)
March 31, 2020	$	526	$	5,060	$	12,915	$	7,215	$	1,066	$	26,782

Net book Value	Land and Buildings		Camp, Roads, and Other Site		Ore Processing Mill		Heavy Machinery and Equipment		Leasehold Improvements & Other		Total
December 31, 2019	$	1,202	$	562	$	10,636	$	2,251	$	47	$	14,698
												(i)
March 31, 2020	$	1,183	$	524	$	10,487	$	1,109	$	10	$	13,313

(i) Refer to Note 12, as amount excludes ROU assets net book value of $981,000 as of March 31, 2020

During the three month period ended March 31, 2020, the Corporation recorded total depreciation of property, plant and equipment of $490,000 (2019 - $442,000) of which $356,000 (2019 - $328,000) has been charged to income under general expenses and mine site care and maintenance, and $51,000 (2019 - $48,000) has been charged to discontinued operations.

Of the depreciation recorded for the three month period ended March 31, 2020, $83,000 (2019 - $66,000) was related to property, plant and equipment used in exploration activities and has been capitalized to mineral properties.

Alexco Resource Corp. |  9  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

9. Mineral Properties

	December 31 2019		Expenditures Incurred		March 31 2020
Mineral Properties
Keno Hill District Properties
Bellekeno	$	7,566	$	190	$	7,756
Lucky Queen		941		41		982
Onek		1,105		27		1,132
McQuesteni		1,997		—		1,997
Silver King		4,464		—		4,464
Flame & Moth		28,904		146		29,050
Bermingham		36,273		1,571		37,844
Elsa Tailings		884		—		884
Other Keno Hill Properties		7,373		—		7,373
Total	$	89,507	$	1,975	$	91,482

	December 31 2018		Expenditures Incurred		December 31 2019
Mineral Properties
Keno Hill District Properties
Bellekeno	$	7,123	$	443	$	7,566
Lucky Queen		824		117		941
Onek		1,065		40		1,105
McQuesteni		1,997		—		1,997
Silver King		4,464		—		4,464
Flame & Moth		28,311		593		28,904
Bermingham		32,084		4,189		36,273
Elsa Tailings		884		—		884
Other Keno Hill Properties		5,474		1,899		7,373
Total	$	82,226	$	7,281	$	89,507

(i) Effective May 24, 2017, and as amended on July 8, 2019, the Corporation entered into an option agreement with Banyan Gold Corp. (“Banyan”) to buy up to 100% of Alexco’s McQuesten property. In three stages, Banyan may earn up to 100% of the McQuesten property, by incurring a minimum $2,600,000 in exploration expenditures ($1,510,943 incurred to March 31, 2020), issue 1,600,000 shares (1,200,000 shares issued), pay in staged payments a total of $2,600,000 in cash or shares and grant Alexco a 6% net smelter return (“NSR”) royalty with buybacks totalling $7,000,000 to reduce to a 1% NSR royalty on gold and 3% NSR royalty on silver. As at March 31, 2020, the option agreement is in good standing.

	Mining Operations Properties			Exploration and Evaluation Properties		Total
March 31, 2020
Cost	$	101,448		$	80,493	$	181,941
Accumulated depletion and write-downs		(90,459	)		—		(90,459	)
Net book value	$	10,989		$	80,493	$	91,482
December 31, 2019
Cost	$	100,073		$	79,893	$	179,966
Accumulated depletion and write-downs		(90,459	)		—		(90,459	)
Net book value	$	9,614		$	79,893	$	89,507

Alexco Resource Corp. |  10  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

10. Embedded Derivative Asset and Silver Stream

	March 31 2020		December 31 2019
Embedded derivative asset - Beginning of period	$	15,160	$	9,671
Fair value adjustment		8,097		5,489
Embedded derivative asset - End of period	$	23,257	$	15,160

On October 2, 2008 (with subsequent amendments on October 20, 2008, December 10, 2008, December 22, 2009, March 31, 2010, January 15, 2013, March 11, 2014 and June 16, 2014), the Corporation entered into a silver purchase agreement (the "SPA") with Wheaton under which Wheaton will receive 25% of the life of mine payable silver produced by the Corporation from its Keno Hill Silver District properties. The SPA anticipated that the initial silver deliveries would come from the Bellekeno property. Under the SPA, the Corporation received up-front deposit payments from Wheaton totaling US$50,000,000, and received further payments of the lesser of US$3.90 (increasing by 1% per annum after the third year of full production) and the prevailing market price for each ounce of payable silver delivered, if as and when delivered. After the initial 40 year term of the SPA, the Corporation is required to refund the balance of any advance payments received and not yet notionally reduced through silver deliveries. The Corporation would also be required to refund the balance of advance payments received and not yet reduced if Wheaton exercised its right to terminate the SPA in an event of default by the Corporation.

On March 29, 2017 the Corporation and Wheaton amended the SPA (the “Amended SPA”), such that Wheaton will continue to receive 25% of the life of mine payable silver from the Keno Hill Silver District with a variable production payment based on monthly silver head grade and monthly silver spot price. The actual monthly production payment from Wheaton will be determined based on the monthly average silver head grade at the mill and the monthly average silver spot price, as determined by a grade and pricing curve with an upper ceiling grade of 1,400 grams per tonne (“g/t”) silver and price of US$25 per ounce of silver and a floor grade of 600 g/t silver and price of US$13 per ounce of silver. Additional terms of the amendment include a date for completion of the 400 tonne per day mine and mill completion test, which on April 21, 2020 was reset to December 31, 2021. If the completion test is not satisfied by December 31, 2021, the Corporation will be required to pay a capacity related refund to Wheaton in the maximum amount of US$8,788,000, which can be further proportionately reduced by mine production and mill throughput exceeding 322 tonnes per day for a 30 day period prior to December 31, 2021. The Amended SPA is secured against the Corporation’s mineral properties until repayment of the original deposit of US$50,000,000.

In consideration of the foregoing amendments, the Corporation issued 3,000,000 shares on April 10, 2017 to Wheaton with a fair value of $6,600,000 (US$4,934,948). Under the terms of the Amended SPA, the original US$50,000,000 deposit was notionally reduced by this amount. The variability in the future cash flows to be received from Wheaton upon extraction and delivery of their 25% interest of future production is considered an embedded derivative within this host contract under IFRS 9, Financial Instruments. The embedded derivative asset was initially recorded at fair value based on the value of the consideration paid to Wheaton and is to be re-measured at fair value on a recurring basis at each period end with changes in value being recorded within the Statement of Income and Loss.

As at March 31, 2020, the fair value of the embedded derivative was calculated based on the discounted future cash flows associated with the difference between the original US$3.90 per ounce production payment Wheaton would pay for each payable ounce delivered under the SPA and the new production payment under the Amended SPA which varies depending on the monthly silver head grade and monthly silver price. The model currently relies upon inputs from the pre-feasibility study (the “PFS”), including payable ounces delivered and calculated future silver head grade. This calculation will be further modified upon completion of further studies, mine plans and/or actual production. The valuation model for the embedded derivative utilizes a probability-based dynamic pricing structure as opposed to a static pricing structure. As such, the discount rate used and silver price assumptions are updated quarterly based on the risk-free yield curve and silver price forward curve at quarter end.

Alexco Resource Corp. |  11  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

11. Accounts Payable and Accrued Liabilities

	March 31 2020		December 31 2019
Trade payables	$	1,759	$	2,450
Accrued liabilities and other		1,500		2,693
	$	3,259	$	5,143

12. Leases

a) Right-of-use assets

The Corporation’s significant lease arrangements primarily include contracts for leasing office facilities. As at March 31, 2020, $981,000 of right-of-use assets were recorded as part of property, plant and equipment.

	March 31 2020		December 31 2019
Right-of-use asset - Beginning of period	$	1,350	$	1,833
Depreciation		(93)		(533	)
Disposals		(276)		—
	$	981	$	1,300

(i) During the three month period ended March 31, 2020, the Corporation recorded total depreciation of $93,000 of which $50,000 has been charged to discontinued operations.

b) Lease liabilities

As at March 31, 2020, the Corporation had, $1,049,000 of lease liabilities. The incremental borrowing rate for lease liabilities initially recognized as of January 1, 2019 was 10.83%.

	March 31 2020		December 31 2019
Lease liability, Beginning of period	$	1,446	$	1,883
Cash flows: Principal payments Non-cash changes: Accretion Disposals		(117) 31 (311)		(599) 162 —
Lease liability   Less : current portion		1,049 178		1,446 406
	$	871	$	1,040

(ii) During the three month period ended March 31, 2020, the Corporation made $117,000 in lease payments, of which $46,000 has been reclassed to discontinued operations. For the same period, the Corporation recorded total accretion of $31,000 of which $5,000 has been charged to discontinued operations.

Alexco Resource Corp. |  12  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

c) Undiscounted lease payments

As at March 31, 2020, the Corporation’s undiscounted lease payments consisted of the following:

	March 31 2020
2020	$	211
2021 2022 2023 2024		278 281 289 289
	$	1,348

13. Decommissioning and Rehabilitation Provision

	March 31 2020		December 31 2019
Balance - beginning of period	$	6,202	$	5,286
Increase due to re-estimation		304		853
Accretion expense, included in finance costs		11		63
Balance - end of period	$	6,517	$	6,202

The Corporation’s decommissioning and rehabilitation provision consists of costs expected to be incurred in respect of future reclamation and closure activities at the end of the life of the Bellekeno, Flame & Moth, Bermingham, Lucky Queen and Onek deposits. These activities include water treatment, land rehabilitation, ongoing monitoring, care and maintenance and other reclamation and closure related requirements.

The total inflation adjusted estimated cash flows required to settle the decommissioning and rehabilitation provision is estimated to be $7,317,000 (December 31, 2019 - $7,464,000), with the expenditures expected to be incurred substantially over the course of the next 20 years. In determining the carrying value of the decommissioning and rehabilitation provision as at March 31, 2020, the Corporation has used a risk-free discount rate of 1.16% (December 31, 2019 - 1.65%) and an inflation rate of 2.0% (December 31, 2019 - 2.0%) resulting in a discounted amount of $6,442,000 (December 31, 2019 - $6,138,000).

14. Capital and Reserves

Shareholders’ Equity

The Corporation is authorized to issue an unlimited number of common shares without par value.

The following share transactions took place during the three month period ended March 31, 2020:

1. On March 27, 2020, the Corporation completed a public offering and issued 4,662,675 common shares at a price of $1.85 per share for aggregate gross proceeds of $8,625,948. This issuance is under the base shelf prospectus filed on September 21, 2018 as detailed below. The Corporation incurred share issuance costs of $865,000.

2. 251,664 common shares were issued from treasury on the vesting of restricted share units (“RSUs”).

3. 592,333 options were exercised for proceeds of $405,000.

On September 21, 2018 the Corporation filed a short form base shelf prospectus (“Shelf”) with the securities commissions, which would allow the Corporation to make offerings of common shares, warrants, subscription receipts and/or units up to an aggregate total of $50,000,000 during the 25-month period following September 21, 2018. As of March 31, 2020, the balance remaining on the Shelf is $32,739,620.

Alexco Resource Corp. |  13  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

Equity Incentive Plans

At the Corporations annual general meeting held June 6, 2019, the shareholders approved three new equity incentive plans consisting of a stock option plan (the “Option Plan”), a restricted share unit plan (the “RSU Plan”) and a deferred share unit plan (the “DSU Plan”) (collectively the “Equity Incentive Plans”), under which the aggregate number of common shares:

i. On the Option Plan the maximum aggregate number of common shares issuable on the exercise of stock options cannot exceed 10% of the number of common shares issued and outstanding;

ii. On the RSU Plan the maximum aggregate number of common shares to be issued cannot exceed 3% of the number of common shares issued and outstanding; and

iii. On the DSU Plan the maximum aggregate number of common shares to be issued cannot exceed 2,100,000.

As at March 31, 2020, a total of 9,867,900 stock options, 412,006 RSUs and 280,000 DSUs were outstanding under the Equity Incentive Plans and a total of 2,597,833 stock options, 3,327,714 RSUs and 1,820,000 DSUs remain available for future granting.

Incentive Stock Options

Generally stock options under the New Option Plan have a maximum term of five years, vest one-third upon grant and one third on each of the first and second anniversary dates of the grant date. The exercise price may not be less than the immediately preceding five day volume weighted average price of the Corporation’s common shares traded through the facilities of the exchange on which the Corporation’s common shares are listed.

The changes in incentive share options outstanding are summarized as follows:

	Weighted average exercise price		Number of shares issued or issuable on exercise			Amount
Balance - December 31, 2019	$	1.81		10,465,233		$	8,151
Stock options granted1		—		—			—
Share-based compensation expense		—		—			364
Options exercised	$	0.72		(592,333	)		(200	)
Options forfeited or expired	$	0.60		(5,000	)		(1	)
Balance - March 31, 2020	$	1.88		9,867,900		$	8,314
Balance - December 31, 2018	$	1.66		7,738,833		$	5,469
Stock options granted	$	1.93		4,053,900			—
Share-based compensation expense		—		—			3,507
Options exercised	$	0.90		(852,500	)		(383	)
Options forfeited or expired	$	1.94		(475,000	)		(442	)
Balance - December 31, 2019	$	1.81		10,465,233		$	8,151

During the three month period ended March 31, 2020, there were no stock options granted. For the three month period ended March 31, 2019 fair value of options at the date of grant was estimated using the Black-Scholes option pricing model, assuming an average risk-free rate of 1.65% to 1.86% per annum, an expected life of options of 4 years, an expected volatility of 62% to 72% based on historical volatility, an expected forfeiture rate of 0% to 2% and no expected dividends.

Alexco Resource Corp. |  14  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

Incentive share options outstanding and exercisable at March 31, 2020 are summarized as follows:

	Options Outstanding			Options Exercisable
Exercise Price	Number of Shares Issuable on Exercise	Average Remaining Life (Years)	Average Exercise Price	Number of Shares Issuable on Exercise	Average Exercise Price
$0.84	1,205,000	0.87	$  0.84	1,205,000	$  0.84
$1.27	1,699,000	3.76	$  1.27	1,274,250	$  1.27
$1.27	325,000	1.76	$  1.27	—	$  1.27
$1.73	500,000	1.19	$  1.73	500,000	$  1.73
$1.75	40,000	2.38	$  1.75	40,000	$  1.75
$1.76	50,000	3.99	$  1.76	37,500	$  1.76
$1.78	150,000	1.24	$  1.78	150,000	$  1.78
$1.93	60,000	3.11	$  1.93	60,000	$  1.93
$2.07	1,733,000	2.83	$  2.07	1,733,000	$  2.07
$2.07	587,000	2.83	$  2.07	—	$  2.07
$2.32	1,544,000	1.84	$  2.32	1,544,000	$  2.32
$2.61	1,974,900	4.71	$  2.61	658,300	$  2.61
	9,867,900	2.83	$  1.88	7,202,050	$  1.79

The weighted average share price at the date of exercise for options exercised during the three month period ended March 31, 2020 was $2.79 (2019 - $1.73).

During the three month period ended March 31, 2020, the Corporation recorded total share-based compensation expense of $364,000 (2019 - $823,000), which related to incentive share options, of which $71,000 (2019 - $111,000) was recorded to mineral properties and $293,000 (2019 - $712,000) has been charged to income.

Restricted Share Units

Generally RSUs vest one-third upon issuance and one third on each of the first and second anniversary dates of the issuance date.

The changes in RSUs outstanding are summarized as follows:

	Number of shares issued or issuable on vesting			Amount
Balance - December 31, 2019		663,670		$	494
Share-based compensation expense recognized		—			124
RSUs vested		(251,664	)		(354	)
Balance - March 31, 2020		412,006		$	264
Balance - December 31, 2018		273,989		$	371
RSUs granted		860,000			—
Share-based compensation expense recognized		—			963
RSUs vested		(470,319	)		(840	)
Balance - December 31, 2019		663,670		$	494

During the three month period ended March 31, 2020 the Corporation granted a total of $nil RSUs (2019 - 625,000) with a total grant-date fair value determined to be $nil (2019 - $794,000).

Alexco Resource Corp. |  15  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

Included in general and administrative expenses for the three month period ended March 31, 2020 is share-based compensation expense of $124,000 (2019 - $406,000) related to RSU awards.

The weighted average share price at the date of vesting for RSUs during the three month period ended March 31, 2020 was $2.77 (2019 - $1.46).

Deferred Share Units

Only directors of the Corporation are eligible for DSUs and each DSU vests immediately and is redeemed upon a director ceasing to be a director of the Corporation.

During the three month period ended March 31, 2020 the Corporation did not grant any DSUs.

15. General and Administrative Expenses by Nature of Expense

The Corporation recorded general and administrative expenses for the three month periods ending March 31, 2020 and 2019 as follows:

Corporate
	2020		2019
General and administrative expenses
Depreciation of property, plant and equipment Depreciation from ROU assets		$ 21 52		$ 22 52
Amortization of intangible assets		3		3
Business development and investor relations		66		73
Office, operating and non-operating overheads		146		145
Professional		271		71
Regulatory		185		153
Restructuring costs		—		—
Salaries and contractors		639		1,035
Share-based compensation		401		1,089
Travel		24		25
	$	1,808	$	2,668
Discontinued operations1
		2020		2019
General and administrative expenses
AEG	$	1,263	$	1,669
	$	1,263	$	1,669
Note:
1. The environmental services business, AEG, was sold on February 14, 2020. These expenses  are reflected under discontinued operations and are no longer being incurred by Alexco subsequent to February 14, 2020 (see Note 4).

Alexco Resource Corp. |  16  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

16. Mine Site Care and Maintenance

The Corporation recorded mine site care and maintenance expenses for the three month periods ended March 31, 2020 and 2019 as follows:

	2020		2019
Mine site care and maintenance
Depreciation of property, plant and equipment	$	330	$	308
Salaries and contractors		207		83
Materials and equipment		90		73
Other expenses		186		160
	$	813	$	624

17. Other Income and expenses

The Corporation recorded other income and expenses for the three month periods ended March 31, 2020 and 2019 as follows:

	2020			2019
Credit Facility fee - warrants	$	—		$	(195	)
Interest on lease liabilities Loss on investments		(31) (32)			(34) (14)
Interest income		48			25
Foreign exchange gain (loss)		6			(1	)
Other income (expenses)		(7	)		(14	)
	$	(16	)	$	(233	)

18. Financial Instruments

Financial Assets and Liabilities

Information regarding the carrying amounts of the Corporation’s financial assets and liabilities is summarized as follows:

	Fair Value Hierarchy Classification		March 31 2020		December 31 2019
Fair value through profit or loss
Warrants	Level 2	$	8	$	40
Embedded derivative - Wheaton agreement	Level 3	$	23,257	$	15,160
Fair value through other comprehensive loss
Investment in marketable securities	Level 1	$	720	$	1,289
		$	23,985	$	16,489

During the three month period ended March 31, 2020, the fair value of warrants were estimated using the Black-Scholes option pricing model, assuming a risk-free interest rate of 0.46% (2019 - 1.56%) per annum, an expected life of options of 0.30 to 1.05 years (2019 - 0.38 to 1.73 years), an expected volatility of 77% to 94% (2019 - 74% to 92%) based on historical volatility and no expected dividends (2019 - nil).

Alexco Resource Corp. |  17  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

During the three month period ended March 31, 2020, the fair value of the embedded derivative related to the Wheaton agreement was estimated using a probability-based dynamic pricing structure resulting in a mark-to-market adjustment of $8,097,000 (2019 - 5,482,000). The model currently relies upon inputs from the PFS dated March 28, 2019, and considers payable ounces delivered and head grade. The model is updated quarterly for the discount rate used and silver price assumptions based on the risk-free yield curve and silver price forward curve at quarter end.

The carrying amounts of all of the Corporation’s other financial assets and liabilities, carried at amortized cost, reasonably approximate their fair values due to their short-term nature.

19. Supplemental Cash Flow Information

Supplemental cash flow information with respect to the three month period ended March 31, 2020 and 2019 is summarized as follows:

	2020		2019
Operating Cash Flows Arising From Interest and Taxes
Interest received		32		38
Non-Cash Investing and Financing Transactions
Capitalization of share-based compensation to mineral properties		71		111
Capitalization of depreciation to mineral properties		83		66
Capitalization of re-estimation of decommissioning and rehabilitation provision		304		96
Increase in non-cash working capital related to:
Mineral properties		203		433

20. Segmented Information

The Corporation had two operating segments during the three month periods ended March 31, 2020 and 2019, being firstly mining operations, including care and maintenance of the formerly operating Bellekeno mine, producing silver, lead and zinc in the form of concentrates (suspended in September 2013), as well as exploration, underground development and evaluation activities; and secondly environmental services carried out through ERDC and AEG, providing consulting and project management services in respect of environmental permitting and compliance and site remediation and reclamation. AEG was sold on February 14, 2020 (See Note 4). The Corporation will continue to operate an environmental reclamation segment of the business focused on the clean-up of historical liabilities of the Keno Hill Silver District through a contract with the Federal Government of Canada. The Corporation’s executive head office and general corporate administration are included within ‘Corporate and other’ to reconcile the reportable segments to the consolidated financial statements. An operating segment is a component of an entity that engages in business activities, operating results are reviewed by the chief operating decision maker with respect to resource allocation and for which discrete financial information is available. The chief operating decision maker for the Corporation is the Chief Executive Officer. Inter-segment transactions are recorded at amounts that reflect normal third-party terms and conditions, with inter-segment profits eliminated from the cost base of the segment incurring the charge.

Segmented information as at and for the three month period ended March 31, 2020 and 2019 is summarized as follows:

Alexco Resource Corp. |  18  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

As at and for the three month period ended March 31, 2020	Environmental Reclamation		Mining			Corporate and Other			Total
Segment revenues
External customers
Canadian	$	567	$	—		$	—		$	567
Total revenues as reported		567		—			—			567
Cost of sales		540		—			—			540
Depreciation and amortization		—		330			76			406
Share-based compensation		—		—			401			401
Other G&A expenses		—		—			1,352			1,352
Mine site care and maintenance		—		483			—			483
Foreign exchange (gain) loss		—		3			(9	)		(6	)
Loss on investments		—		7			25			32
Gain on derivative asset		—		(8,097	)		—			(8,097	)
Other (income) loss		—		—			(31	)		(31	)
Segment income (loss) before taxes	$	27	$	7,274		$	(1,814	)	$	5,487	i)
Total assets	$	882	$	136,035		$	26,736		$	163,653
Total liabilities	$	689	$	14,041		$	2,115		$	16,845

As at and for the three month period ended March 31, 2019	Environmental Reclamation			Mining			Corporate and Other			Total
Segment revenues
External customers
Canadian	$	290		$	—		$	—		$	290
Non-Canadian		—			—			—			—
Total revenues as reported		290			—			—			290
Cost of sales		317			—			—			317
Depreciation and amortization		—			308			77			385
Share-based compensation		—			—			1,089			1,089
Other G&A expenses		—			19			1,483			1,502
Mine site care and maintenance		—			316			—			316
Foreign exchange (gain) loss		—			(2	)		3			1
Loss on investments					4			10			14
Gain on derivative asset		—			(5,482	)		—			(5,482	)
Other (income) loss		—			14			204			218
Segment income (loss) before taxes	$	(27	)	$	4,823		$	(2,866	)	$	1,930	(i)
Total assets	$	10,987		$	119,877		$	6,055		$	136,919
Total liabilities	$	4,045		$	10,869		$	2,810		$	17,724

(i) Represents consolidated loss before taxes.

21. Related Party Transactions

The Corporation’s related parties include its subsidiaries and key management personnel. Key management includes the Corporation’s Board of Directors and members of senior management. Key management compensation for the three month periods ended March 31, 2020 and 2019 was as follows:

Alexco Resource Corp. |  19  

ALEXCO RESOURCE CORP.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2020 AND 2019

(figures in tables are expressed in thousands of Canadian dollars, except per share amounts)

	2020		2019
Salaries and other short-term benefits	$	834	$	946
Share-based compensation		363		1,009
	$	1,197	$	1,955

22. Commitments

As at March 31, 2020, the Corporation’s contractual obligations are as follows:

(a) The Corporation’s other contractual obligations, including with respect to capital asset expenditures, totaled approximately $360,000.

(b) As a consequence of its commitment to renounce deductible exploration expenditures to the purchasers of flow-through shares, the Corporation is required to incur further renounceable exploration expenditures totaling $1,115,000 by December 31, 2020.

Alexco Resource Corp. |  20  

EX-99.2

Exhibit 99.2

 

ALEXCO RESOURCE CORP.

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the Three Month Period Ended March 31, 2020

Suite 1125, 555 Burrard Street, Vancouver, BC V7X 1M9 ׀ Phone: 604-633-4888 Fax: 604-633-4887

www.alexcoresource.com

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three month period ended March 31, 2020

TABLE OF Contents

2020-Q1 HIGHLIGHTS AND OVERALL PERFORMANCE	1
CORPORATE	1
MINE OPERATIONS AND EXPLORATION	2
ALEXCO ENVIRONMENTAL GROUP (“AEG”) – DISCONTINUED OPERATIONS	2
OVERVIEW OF THE BUSINESS	4
OUTLOOK AND STRATEGY	4
Keno Hill Silver District	4
ERDC	4
Economic Climate	5
2020 OUTLOOK	5
Keno Hill Silver District	5
RESULTS OF OPERATIONS	6
Mine Site Care and Maintenance	6
ERDC	6
General and Administrative Expenses	6
SUMMARY OF QUARTERLY RESULTS	7
Liquidity, Cash Flows and Capital Resources	8
Silver Purchase Agreement (“SPA”) with Wheaton	9
Sensitivity of Embedded Derivative	10
Share Data	11
Financial Instruments	11
Off-Balance Sheet Arrangements	12
Related Party Transactions	12
Critical Accounting Estimates and Judgments	13
Non-GAAP Measures	13
Internal Control Over Disclosure Controls and Procedures and Financial Reporting	13
Risk Factors	13
Summary of Mineral Reserve and Resource Estimates	15
Cautionary Statement Regarding Forward-Looking Statements	17
Technical Disclosure Cautionary Note to U.S. Investors – Information Concerning Preparation of Resource Estimates	18

Alexco Resource Corp. | i  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

This Management’s Discussion and Analysis (“MD&A”) of Alexco Resource Corp. (“Alexco”, the “Corporation” or the “Company”) is dated May 13, 2020 and provides an analysis of Alexco’s unaudited interim condensed consolidated financial results for the three month period ended March 31, 2020 (“Q1 2020”) compared to the three month period ended March 31, 2019 (“Q1 2019”).

The following information should be read in conjunction with the Corporation’s March 31, 2020 unaudited interim condensed consolidated financial statements with accompanying notes (the “2020-Q1 Interim F/S”), which have been prepared in accordance with IAS 34 Interim Financial Reporting, and with the Corporation’s audited consolidated financial statements with accompanying notes and related MD&A for the fiscal year ended December 31, 2019, which were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The 2020-Q1 Interim F/S follow the same accounting policies and methods of computation as compared with the most recent fiscal financial statements. All dollar figures are expressed in Canadian dollars unless otherwise stated. These documents and additional information on the Corporation are available on the Corporation’s website at www.alexcoresource.com and on the SEDAR website at www.sedar.com and Edgar at www.sec.gov.

Except where specifically indicated otherwise, the disclosure in this MD&A of scientific and technical information regarding exploration projects on Alexco’s mineral properties has been reviewed and approved by Alan McOnie, FAusIMM, Vice President, Exploration, while that regarding mine development and operations has been reviewed and approved by Neil Chambers, P.Eng., Chief Mine Engineer, both of whom are Qualified Persons as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).

All dollar figures are expressed in Canadian dollars unless otherwise stated.

2020-Q1 HIGHLIGHTS AND OVERALL PERFORMANCE

CORPORATE

· Overall, Alexco reported net income of $12,053,000, or $0.10 per share for Q1 2020 compared to net income of $1,207,000 for Q1 2019. The net income for Q1 2020 included a gain on the sale of the Alexco Environmental Group (“AEG”) in the amount of $8,030,000 and a non-cash fair value gain of $8,097,000 on the embedded derivative related to the Wheaton Precious Metals Corp. (“Wheaton”) streaming agreement offset by corporate overhead costs and mine-site care and maintenance costs. The net income for Q1 2019 included a non-cash fair value gain of $5,482,000 on the embedded derivative related to the Wheaton streaming agreement offset by corporate overhead costs and mine-site care and maintenance costs.

· The Corporation’s cash and cash equivalents at March 31, 2020 totaled $22,308,000 compared to $6,841,000 at December 31, 2019, while net working capital (see Non-GAAP Measures on page 13) totaled $23,219,000 compared to $10,090,000 at December 31, 2019. The Corporation’s restricted cash and deposits at March 31, 2020 totaled $3,108,000 compared to $2,777,000 at December 31, 2019.

· On March 27, 2020, the Corporation completed a public offering (the “Offering”) and issued 4,662,675 common shares at a price of $1.85 per share for aggregate gross proceeds of $8,625,948 for net cash proceeds of $7,764,000.

Alexco Resource Corp. | 1  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

MINE OPERATIONS AND EXPLORATION

·On March 30, 2020 Alexco announced the implementation of a COVID-19 response and management plan to protect the health and safety of its employees and contractors as well as the local communities in which it operates (see press release dated March 30, 2020 entitled “Alexco Provides Corporate Update”). The Corporation suspended underground mine development activities while continuing to maintain all areas at the Keno Hill site. Mill improvement and refurbishment projects were continued by Yukon-based employees while non-essential Keno Hill site-based employees transitioned to working remotely on a number of engineering and project planning assignments.

·During the quarter the Corporation made steady progress on scale up mine site development activities including recruitment of key personnel and senior site management, securing long lead time orders for mine equipment and advancing capital infrastructure projects at the mill and across the project site.

·The Company’s 2020 surface exploration program originally planned to include approximately 11,500 meters (“m”) of surface drilling beginning in May, was deferred as a result of the COVID-19 restrictions. The revised surface exploration drilling program is expected at a minimum to include 4,200 m of surface drilling beginning in mid to late summer and will focus on the Bermingham “deep target”, where exploration drilling in 2019 successfully confirmed the presence of wide, high-grade mineralization developed at depth below the Bermingham high grade silver resource.

ALEXCO ENVIRONMENTAL GROUP (“AEG”) – DISCONTINUED OPERATIONS

· On February 14, 2020 the Corporation entered into a share purchase agreement (the “AEG Sale Agreement”) for the sale of AEG, to AEG’s executive management (“AEG Management”) led by AEG’s President (a related party transaction due to the AEG President being a key member of management of Alexco). Under the terms of the AEG Sale Agreement, AEG Management purchased all of the shares of AEG in consideration for payment to Alexco of $13,350,000. On closing of the transaction, AEG Management paid $12,100,000 in cash, with the balance of $1,250,000 payable pursuant to a promissory note that matures on February 14, 2021.

· As part of the sale of AEG, Alexco retained ownership of Elsa Reclamation & Development Company Ltd. (“ERDC”) and will execute the clean-up of historical mines in the Keno Hill Silver District under its existing contractual arrangement with the Federal Government of Canada (“Canadian Government”).

· For the period January 1, 2020 through February 14, 2020 (the “Stub Period”) AEG recognized revenues of $2,207,000 for a gross profit of $783,000 achieving a gross margin of 35%. AEG recognized an operating loss after taxes for the Stub Period of $694,000. These results are reflected in discontinued operations (see Note 4 in the financial statements for the three month period ended March 31, 2020).

Alexco Resource Corp. | 2  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

The carrying amounts of assets and liabilities of the disposal group as at December 31, 2019, which form part of the AEG Sale Agreement are as follows:

Assets
Cash and restricted cash	$	348,000
Accounts receivable and accrued receivables Inventories Prepaid expenses Property and equipment		6,021,000 162,000 200,000 1,638,000
Other assets		935,000
Total assets	$	9,304,000
Liabilities
Accounts payable and other liabilities Lease liabilities	$	1,767,000 356,000
Deferred revenue		775,000
Total liabilities	$	2,898,000

The net income reported for Q1 2020 includes results from discontinued operations for the period January 1, 2020 to February 14, 2020 as follows:

Revenue
Environmental Services Revenue	$	2,207,000
Cost of Sales Environmental Services Cost	1,424,000
Total Gross Profit	$	783,000
Expenses
General and administrative expenses Deferred tax expense	$	1,263,000 214,000
Net loss	$	694,000

Alexco Resource Corp. | 3  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

OVERVIEW OF THE BUSINESS

Alexco owns substantially all of the historic Keno Hill Silver District (“KHSD” or the “District”), located in Canada's Yukon Territory. The Bellekeno silver mine, a high grade silver operation with a production grade averaging 779 grams per tonne (“g/t”) silver (“Ag”), commenced commercial production at the beginning of 2011 and was Canada's only operating primary silver mine from 2011 to 2013, producing a total of 5.6 million (“M”) ounces of silver during the 2010 – 2013 period. In September 2013 Alexco suspended Bellekeno mining operations in light of sharply reduced silver and base metal prices. Since the suspension Alexco has focused on advancing the newly discovered Flame & Moth and the Bermingham deposits, renegotiating third party contracts and reviewing other opportunities to reduce future mining operating costs for future operations at Keno Hill. This work culminated with the announcement of the pre-feasibility study (“PFS”) results in March 2019 and the publication of the PFS in May 2019, as amended in February 2020. Alexco is moving toward resumption of silver production at Keno Hill, including production from the Bellekeno, Flame & Moth, Bermingham and Lucky Queen silver deposits, subject to a positive production decision.

The KHSD lies within the traditional territory of the First Nation of Na-Cho Nyak Dun (“FNNND”). Alexco is party to a Comprehensive Cooperation and Benefits Agreement (“CCBA”) with the FNNND, setting out common understandings, obligations and opportunities arising from all of Alexco’s activities within the District including exploration, care and maintenance, District closure activities and mine production.

Alexco is a public company which is listed on the NYSE American Stock Exchange and the Toronto Stock Exchange (under the symbol AXU).

OUTLOOK AND STRATEGY

Keno Hill Silver District

Alexco’s current focus is to re-start mining operations at Keno Hill. Alexco has the requisite permits and authorizations for future ore production from the Flame & Moth, Bermingham, Lucky Queen, Bellekeno and Onek deposits. Amendment of the Corporation’s Quartz Mining License (“QML”) was completed in the fourth quarter of 2019, which incorporates the Bermingham deposit into the mine plan. Alexco is in the final steps of renewing the WUL having completed the public hearing in February 2020 and expects the granting of the Water Use License (“WUL”) renewal in the second quarter of 2020. Once renewed the WUL will authorize the use of water and deposition of waste from mining and milling operations at the Bermingham, Flame & Moth, Bellekeno and Lucky Queen (and Onek) deposits for a period of 15 years.

ERDC

In parallel, Alexco, through ERDC, continues to advance the reclamation project. As part of Alexco’s 2006 acquisition of the United Keno Hill Mines (“UKHM”) mineral rights in the District, ERDC, a wholly owned subsidiary of Alexco, is party to the amended and restated subsidiary agreement (“ARSA”) with the Canadian Government. Under the ARSA, ERDC is retained by the Canadian Government as a paid contractor responsible on a continuing basis for the environmental care and maintenance for the reclamation of the historical environmental liabilities of the former UKHM mineral properties. The ARSA provides that ERDC share the responsibility for the development of the ultimate closure plan with the Canadian Government.

ERDC currently holds a Type B WUL under the Yukon Waters Act to undertake care and maintenance activities in the Keno Hill area. ERDC is responsible for carrying out the environmental care and maintenance at various sites within the UKHM mineral rights, for a fixed annual fee established on a per-site basis totaling $850,000, adjustable for material changes in scope.

The Reclamation Plan at Keno Hill was completed in September 2018 and was subsequently submitted for environmental assessment by the YESAB. In February 2020 a final Evaluation Report was issued by YESAB. Once the Decision Document is issued, ERDC will enter into the Yukon Water Board’s licencing process to authorize the activities necessary to effect closure of the site. After licencing, the Reclamation Plan must be finalized for submission to Crown-Indigenous Relations and Northern Affairs Canada (“CIRNAC”) for approval prior to proceeding into implementation and execution of the final cleanup project.

Alexco Resource Corp. | 4  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

Economic Climate

Silver, lead and zinc historically are the primary metals found within the District. With respect to the economic climate during the first three months of 2020, the price of silver has been extremely volatile as a result of the COVID-19 pandemic. The average silver price during the quarter was US$16.90 per ounce. Silver traded from a high of US$18.77 per ounce of silver on February 24, 2020 to a low of US$12.00 per ounce of silver on March 19, 2020, while lead traded between US$0.90 to US$0.73 per pound and zinc traded between US$1.12 to US$0.83 per pound. As at the date of this MD&A, spot commodity prices are approximately US$15.50 per ounce silver, US$0.75 per pound for lead and US$0.90 per pound for zinc and the Canadian-US exchange rate is approximately US$0.71 per CAD. Consensus investment analyst forecasts over the next two years for silver average approximately US$17.13 per ounce of silver, for lead average approximately US$0.87 per pound, and for zinc US$0.98 per pound, with the Canadian-US exchange rate forecast at US$0.75 per CAD (see “Risk Factors” in the MD&A for the year ended December 31, 2019, including but not limited to “Potential Profitability Of Mineral Properties Depends Upon Other Factors Beyond the Control of Alexco” and “General Economic Conditions May Adversely Affect Alexco’s Growth and Profitability” thereunder).

2020 OUTLOOK

Keno Hill Silver District

Keno Hill Development Strategy

The Corporation’s development strategy continues to be a two phased approach moving towards mine and mill operations. Phase 1 work commenced in June 2019 and focused on surface and mill capital improvements along with operations planning and permitting, while Phase 2 will commence only once the Corporation makes a positive production decision, which is subject to granting of the pending WUL and market conditions. Phase 2 work will focus on underground development in preparation for initial production from the Bellekeno and Flame & Moth deposits, mill commissioning and final underground development and ore production of the Bermingham deposit.

2020 Flame & Moth Development

The Flame & Moth production decline is completed to 452 m and requires an additional 336 m of ramp and infrastructure development to reach the first ore level access at the Lightning Zone. In addition, a 100 m ventilation raise to surface will be required before commercial ore production can be achieved. Completion of the remaining ramp development, raise, and infrastructure will commence in Phase II of the development strategy once a positive production decision is made.

2020 Bermingham Development

The Bermingham deposit has underground development totaling 550 m of decline and supporting development completed. Approximately 210 m of ramp and infrastructure development remains to be driven to reach the first ore level access. In addition, a 170 m ventilation raise to surface will be required before commercial ore production can be achieved. Completion of the remaining ramp development, raise and infrastructure will commence in Phase II of the development strategy once a positive production decision is made.

Alexco Resource Corp. | 5  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

Permitting Update

Alexco is in the final steps of amending and renewing the primary WUL for mine-related activity in the District. A public hearing was held in mid-February 2020 and the Company expects the granting of the WUL renewal in the second quarter of 2020. Once renewed, the WUL will authorize the use of water and deposition of waste from mining and milling operations at the Bermingham, Flame & Moth, Bellekeno and Lucky Queen (and Onek) deposits for a period of 15 years.

Exploration

Alexco’s 2020 surface exploration program, originally planned to include approximately 11,500 meters of surface drilling beginning in May, has been deferred and curtailed as a result of the COVID-19 restrictions. The Corporation has contingency plans to execute a reduced surface exploration drilling program once the COVID-19 conditions and circumstances allow. At a minimum, the Company is hopeful that activities can be scaled back up in mid to late summer with a reduced drilling program starting in early July and focusing on the Bermingham “deep target”. Drilling in this area in 2019 successfully confirmed the presence of wide, high-grade mineralization at depth below the Bermingham high grade silver deposit. The Bermingham deposit, comprising 1.1 million tonnes of 930 grams per tonne silver in estimated Indicated Mineral Resource (including Probable Mineral Reserves), remains the highest grade, with approximately 33 million contained silver ounces, and the largest discovery by Alexco at Keno Hill to date (see independent technical report dated May 8, 2019 with an effective date of March 28, 2019, as amended February 13, 2020, prepared by Mining Plus Canada titled “NI 43-101 Technical Report, Prefeasibility Study of the Keno Hill Silver District Project, Yukon Territory, Canada”). The deposit remains open at depth and the objective of the 2020 follow-up deep drilling program will be to evaluate the opportunity for expansion of the Mineral Resource at depth.

During Q1 2020, the Corporation completed a planned extension (from 2018) of the district-wide detailed airborne geophysical program. The interpretation of results from these surveys has proved important in targeting mineralized structures in areas of cover, and will be especially important for target generation and ranking for longer term exploration planning at Keno Hill.

RESULTS OF OPERATIONS

Mine Site Care and Maintenance

Mine site care and maintenance costs for Q1 2020 totaled $813,000 compared to $624,000 for Q1 2019. The costs increased in Q1 2020 compared to Q1 2019 as the Corporation had increased mill maintenance and refurbishment initiatives related to future recommissioning of the mill and related plant during 2020. Included in mine site care and maintenance costs is depreciation expense of $330,000 for Q1 2020 compared to $308,000 for Q1 2019.

ERDC

During Q1 2020, under the contract with the Canadian Government for the remediation of legacy environmental conditions at Keno Hill, ERDC completed the environmental assessment for the Reclamation Plan. A final Evaluation Report by YESAB was issued in February 2020; the Decision Document has not yet been issued. In addition, ERDC continued with detailed engineering related to the final closure plan.

General and Administrative Expenses

Corporate general and administrative expenses during Q1 2020 totaled $1,808,000 compared to $2,668,000 for Q1 2019. These included non-cash costs in the amounts of $477,000 and $1,166,000 in the 2020 and 2019 periods, respectively, which relate to share-based compensation and amortization and depreciation expenses. The decrease in expenses in Q1 2020 is primarily as result of the Company accelerating its annual bonuses and equity grants (stock options, RSUs, and DSUs) from January 2020 to December 2019.

Alexco Resource Corp. | 6  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

SUMMARY OF QUARTERLY RESULTS

Key financial information for the most recent eight quarters is summarized as follows, reported in thousands of Canadian dollars except for per share amounts:

Period	Revenue	Gross Profit	Net Income (Loss)	Basic Income (Loss) per Share	Diluted Income (Loss) per Share	Expenditures Capitalized on Mineral Properties
2018-Q2	3,545	1,368	(1,896)	$(0.02)	$(0.02)	4,812
2018-Q3	4,669	1,702	(1,548)	$(0.01)	$(0.01)	6,517
2018-Q4	8,902	2,152	(1,795)	$(0.02)	$(0.02)	3,163
2018 Total	17,116	5,222	(5,239)	$(0.05)	$(0.05)	14,492
2019-Q1	7,233	1,472	1,207	$ 0.01	$ 0.01	1,266
2019-Q2	8,694	2,034	(1,471)	$(0.01)	$(0.01)	1,690
2019-Q3	7,200	1,420	(2,308)	$(0.02)	$(0.02)	2,531
2019-Q4	6,079	1,150	(6,343)	$(0.06)	$(0.06)	1,794
2019 Total	29,206	6,076	(8,915)	$(0.08)	$(0.08)	7,281
2020-Q1	567	27	12,053	$ 0.10	$ 0.10	1,975

Notes:

1. Sum of all the quarters may not add up to the yearly totals due to rounding

2. The table includes results from continuing and discontinued operations. The revenue and gross profit for the 2020-Q1 period relates to continuing operations and is representative of the portion of revenue and gross profit attributable to continuing operations in prior periods.

The net loss from the 2018 quarters reflect fair value adjustments from the Corporation’s investments, site-based expenditures, mill maintenance initiatives and general and administrative expenses offset by a non-cash fair value gain related to the embedded derivative on the Wheaton streaming agreement. The net income from Q1 2019 reflects a gain on the embedded derivative related to the Wheaton streaming agreement, offset by site-based expenditures along with general and administrative expenses of the Corporation. The net loss for the second quarter of 2019 reflects site-based expenditures along with general and administrative expenses, which were partially offset by a non-cash fair value gain related to the embedded derivative on the Wheaton streaming agreement. The net loss for the third quarter of 2019 reflects continued site-based expenditures at Keno Hill along with general and administrative expenses. The net loss for the fourth quarter of 2019 reflects increased non-cash costs related to a loss on the fair value of the derivative asset related to the Wheaton stream and an increase in share-based compensation expense. The net income from Q1 2020 reflects a gain on the sale of AEG and a gain on the embedded derivative related to the Wheaton streaming agreement, offset by site-based expenditures along with general and administrative expenses of the Corporation.

The mineral property expenditures incurred in the 2018 periods reflect completion of the advanced exploration decline, completion of the underground drilling program at the Bermingham deposit, commencement of the underground development decline at the Flame & Moth deposit and completion of a 15,314 m surface drilling program. The mineral property expenditures in 2019 mainly reflect continued work with independent contractors on the PFS, completion of the 2019 surface exploration drilling program and development infrastructure initiatives at site. The mineral property expenditures in Q1 2020 mainly reflect development activities at site and preparation for the upcoming surface exploration drilling program and completion of an airborne geophysical program.

Alexco Resource Corp. | 7  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

Liquidity, Cash Flows and Capital Resources

Liquidity

At March 31, 2020 the Corporation had cash and cash equivalents of $22,308,000, and net working capital of $23,219,000 compared to cash and cash equivalents of $6,841,000 and net working capital of $10,090,000 at December 31, 2019. The Corporation faces no known liquidity issues and is not aware of any significant credit risks in any of its financial assets. In addition, the Corporation’s restricted cash and deposits at March 31, 2020 totalled $3,108,000 compared to $2,777,000 at December 31, 2019.

With its cash resources and net working capital on hand at March 31, 2020, and assuming no re-start of full scale mining operations within the next twelve months, Alexco anticipates it will have sufficient capital resources to service the working capital requirements of its mine site care and maintenance, exploration activities, and corporate offices and administration, for at least the next 12 month period. As noted elsewhere in this MD&A, re-start of mining operations is dependent on a number of factors, including metal prices, foreign exchange rates, receipt of an amended WUL and the status of the COVID-19 pandemic. A re-start of underground production operations will require additional capital investment, in excess of the capital resources currently on hand. Because of these factors, combined with its long-term objectives for the exploration and development of its mineral properties, the Corporation is likely to require future additional funding.

Historically, Alexco’s main sources of funding have been from mining operations, environmental and reclamation services from ERDC and AEG and equity issuances. All sources of finance reasonably available will be considered to fund future requirements, including but not limited to issuance of new capital, issuance of new debt and the sale of assets in whole or in part, including mineral property interests or other property interests. There can be no assurance of a re-start of mining operations or continued access to finance in the future, and an inability to generate or secure such funding may require the Corporation to substantially curtail and defer its planned exploration and development activities.

Alexco’s activities expose it to a variety of financial risks: market risk (currency risk), credit risk and liquidity risk. Risk management is carried out by management under policies approved by the Board of Directors. Management identifies and evaluates the financial risks in co-operation with the Corporation’s operating units. The Corporation’s overall risk management program seeks to minimize potential adverse effects on the Corporation’s financial performance, in the context of its general capital management objectives as further described in Note 5 of the Corporation’s financial statements for the year ended December 31, 2019.

The Corporation manages liquidity uncertainty by monitoring actual and projected cash flows on a regular basis to ensure the Corporation can service its contractual obligations and commitments such as flow through financing commitments. Factors that can impact the Corporation’s liquidity are monitored regularly and include assumptions of operational levels, operating costs, capital costs and foreign exchange rates.

Cash Flows

	Three Months Ended March 31
	2020			2019
Cash flow used in operating activities	$	(2,594	)	$	(644	)
Cash flow provided (used) in investing activities		9,666			(1,446	)
Cash flow provided by financing activities		8,058			(94	)
	$	15,130		$	(2,184	)

Cash outflow in operating activities was $2,594,000 for Q1 2020 versus $644,000 for Q1 2019. The majority of cash outflow from operating activities during the 2020 and 2019 periods were expended on site-based care and maintenance costs, Keno Hill capital investments, capital requirements for clients on AEG projects, and general and administrative expenses. The increase in cash outflow in operating activities in Q1 2020 relates to an increase in expenditures related to site-based care and maintenance projects. Cash inflow from investing activities were $9,666,000 for Q1 2020 versus cash outflow of $1,446,000 for Q1 2019. The cash inflow from investing activities during Q1 2020 related to proceeds received from the sale of AEG; which were partially offset by expenditures related to the surface exploration program and increased security for decommissioning obligations, which have been reclassified to restricted cash. The cash inflows from financing activities were $8,058,000 for Q1 2020 versus cash outflow of $94,000 for Q1 2019. The cash inflow from Q1 2020 related to an equity financing with net proceeds totalling $7,764,000 and from the exercise of stock options, partially offset by the repayment of lease liabilities. The cash inflow from Q1 2019 related to the exercise of warrants and stock options, partially offset by the repayment of lease liabilities.

Alexco Resource Corp. | 8  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

Silver Purchase Agreement (“SPA”) with Wheaton

On October 2, 2008 (with subsequent amendments on October 20, 2008, December 10, 2008, December 22, 2009, March 31, 2010, January 15, 2013, March 11, 2014 and June 16, 2014), the Corporation entered into a SPA with Wheaton under which Wheaton will receive 25% of the life of mine payable silver produced by the Corporation from its District properties. The SPA anticipated that the initial silver deliveries would come from the Bellekeno property. Under the SPA, the Corporation received up-front deposit payments from Wheaton totaling US$50,000,000 and received further payments of the lesser of US$3.90 (increasing by 1% per annum after the third year of full production) and the prevailing market price for each ounce of payable silver delivered, if as and when delivered. After the initial 40 year term of the streaming interest, the Corporation is required to refund the balance of any advance payments received and not yet notionally reduced through silver deliveries. The Corporation would also be required to refund the balance of advance payments received and not yet reduced if Wheaton exercised its right to terminate the streaming interest in an event of default by the Corporation. As of September 2013, Bellekeno mining operations were suspended in light of a reduced silver price environment.

On March 29, 2017 the Corporation and Wheaton amended the SPA (the “Amended SPA”) such that Wheaton will continue to receive 25% of the life of mine payable silver from the District with a variable production payment based on monthly silver head grade and monthly silver spot price. The actual monthly production payment from Wheaton is determined based on the monthly average silver head grade at the mill and the monthly average spot price, as determined by a grade and pricing curve with an upper ceiling grade of 1,400 g/t silver and price of US$25 per ounce of silver and a floor grade of 600 g/t silver and price of US$13 per ounce of silver. Additional terms of the amendment include a date for completion of the 400 tonnes per day (“tpd”) mine and mill completion test, which has now been extended to December 31, 2021. If the completion test is not satisfied by December 31, 2021, the Corporation may be required to pay a capacity related refund to Wheaton in the maximum amount of US$8,788,000, which can be further proportionately reduced by mine production and mill throughput exceeding 322 tonnes per day for a 30 day period prior to December 31, 2021. The Amended SPA is secured against the Corporation’s mineral properties until repayment of the original deposit of US$50,000,000.

As at March 31, 2020, the fair value of the embedded derivative was calculated based on the discounted future cash flows associated with the difference between the original US$3.90 per ounce production payment Wheaton would pay for each payable ounce delivered under the SPA and the new production payment under the Amended SPA which varies depending on the monthly silver head grade and silver price. The model relies upon inputs from the PFS, such as payable ounces expected to be delivered, head grade and silver price and will continue to be updated as a result of any updated studies, mine plans and actual production. A discount rate of 12.75%, representing the implied discount rate applied to the payment made under the Amended SPA was used to calculate the net present value. There were adjustments totalling $8,097,000 recorded during Q1 2020 (Q1 2019 - $5,482,000) primarily as a result of the impacts from the COVID-19 pandemic including the sharp reduction in silver price, decrease in interest rates as central banks around the world launched stimulus packages, and the strengthening of the US dollar relative to the Canadian dollar whereas the adjustment in the 2019 period primarily related to the impacts from the updated PFS. See “Sensitivities of Embedded Derivative” below.

Alexco Resource Corp. | 9  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

Capital Resources

On March 27, 2020, the Corporation completed the Offering (utilizing the short-form base shelf prospectus below) and issued 4,662,675 common shares at a price of $1.85 per share for aggregate gross proceeds of $8,625,948 for net cash proceeds of $7,764,000.

On September 21, 2018 the Corporation filed a short-form base shelf prospectus with the securities commissions in each of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario and a corresponding amendment to its registration statement on Form F-10 (Registration Statement) with the United States Securities and Exchange Commission (SEC) under the U.S./Canada Multijurisdictional Disclosure System, which would allow the Corporation to make offerings of common shares, warrants, subscription receipts and/or units up to an aggregate total of $50,000,000 during the 25-month period following September 21, 2018.

On February 14, 2020, the Corporation completed the sale of AEG to AEG Management in consideration of $13,350,000 of which $12,100,000 was paid in cash on closing with the balance of $1,250,000 payable pursuant to a promissory note that matures on February 14, 2021.

The following table summarizes the current contractual obligations of the Corporation and associated payment requirements over the next five years and thereafter:

Contractual Obligations (expressed in thousands of dollars)	Payments Due by Period
	Total		Less than 1 year		1 – 3 years		3 – 5 years		After 5 years
Leases	$	1,348	$	211	$	848	$	289	$	Nil
Purchase obligations		360		60		180		120		Nil
Decommissioning and rehabilitation provision (undiscounted basis)		7,317		225		727		134		6,231
Total	$	9,025	$	496	$	1,755	$	543	$	6,231

Sensitivity of Embedded Derivative

As discussed above, the valuation model for the embedded derivative related to the Wheaton SPA currently relies upon inputs from the PFS, such as payable ounces delivered and head grade, and will be updated as a result of updated studies, mine plans and actual production. Furthermore, the valuation model for the embedded derivative is updated quarterly to utilize a probability based dynamic pricing structure as opposed to a static pricing structure. As such, the discount rate used and silver price assumptions being updated quarterly are based on the risk-free yield curve and silver price forward curve at quarter end.

Based on assumptions used in the dynamic valuation model the value of the derivative asset as at March 31, 2020 is $23,257,000. If, for example, the silver price was to decline from the current spot price to US$13 per ounce and all other assumptions remained the same, the approximate derivative asset value would be $23,705,000. Similarly, if the silver price was to increase to US$25 per ounce and all other assumptions remained the same, the approximate derivative asset value would be $401,000. The impacts of these swings in derivative asset value are recorded on the Statement of Profit and Loss through Other Income (Expenses) (see note 10 in the interim condensed consolidated financial statements for three month periods ended March 31, 2020 and 2019). The inputs that to date have had the greatest influence on the dynamic valuation model include changes in silver prices, anticipated mine plan silver production, interest rate yield curve, US dollar relative strength and time to production realization.

Alexco Resource Corp. | 10  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

The following table summarizes the expected stand-alone impact on the embedded derivative asset value based on changes in model inputs:

Dynamic Model Input Change	Expected Impact on Embedded Derivative Asset Value
Silver Price Increase	Decrease
Silver Price Volatility Increase	Decrease
Mill Silver Head Grade Increase	Decrease
Decrease in timeframe to reach production	Increase
Foreign Exchange: US dollar appreciates compared to CDN dollar	Increase
Risk Free Yield Increase	Decrease

Management expects that changes in the fair value of the embedded derivative asset prior to mine production will largely be driven by the risk-free yield curve and silver price forward curve as well as proximity to production date. In a market where the price of silver is static, these changes are expected to be nominal relative to a production scenario, at which time management expects the variability of the fair value adjustments to increase significantly as silver ounces are mined and delivered to Wheaton.

Share Data

As at the date of this MD&A, the Corporation has 124,692,702 common shares issued and outstanding. In addition, there are outstanding incentive share options exercisable into a further 10,091,400 common shares, restricted share units to be settled by way of common shares issued from treasury for a further 406,673 common shares and deferred share units to be settled by way of common shares issued from treasury for a further 280,000 common shares.

Financial Instruments

All of Alexco’s cash and cash equivalents at March 31, 2020 were held in the form of demand deposits. Alexco’s restricted cash and deposits were held in the form of term deposits and demand deposits. Alexco’s other financial instruments were its trade and other accounts receivable, its accounts payable and accrued liabilities, and its investment in marketable securities.

At March 31, 2020, a total of $3,009,000 of Alexco’s restricted cash and deposits represents cash collateral posted with a surety company to underwrite surety bonds for security in respect of mine-site reclamation at certain of Alexco’s mineral properties. The balance of Alexco’s restricted cash and deposits represent security provided in respect of certain long-term operating lease commitments. The term deposits held at March 31, 2020 as individual financial instruments carry initial maturity periods of one year or less. They have been classified as investments and accordingly are carried at amortized cost using the effective interest method. All term deposits held are high grade, low risk investments, generally yielding between 1% and 2% per annum, and their carrying amounts approximate their fair values given their short terms and low yields.

Alexco Resource Corp. | 11  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

The carrying amounts of Alexco’s trade and other accounts receivable and accounts payable and accrued liabilities are estimated to reasonably approximate their fair values, while the carrying amount of investments in marketable securities and embedded derivative are adjusted to fair value at each balance sheet date. The fair values of all of Alexco’s financial instruments measured at March 31, 2020, other than the marketable securities that are included in investments, constitute Level 2 and Level 3 measurements within the fair value hierarchy defined under IFRS. The fair value of the investments in marketable securities constitute Level 1 measurements.

Substantially all of Alexco’s cash, demand deposits and term deposits are held with major financial institutions in Canada. With respect to these instruments, management believes the exposure to credit risk is insignificant due to the nature of the institutions with which they are held, and that the exposure to liquidity and interest rate risk is similarly insignificant given the low-risk-premium yields and the demand or short-maturity-period character of the deposits.

Alexco’s accounts and other receivables at March 31, 2020 total $2,389,000, comprising primarily of a promissory note receivable related to sale of AEG and trade receivables from government agencies. While the Corporation is exposed to credit losses due to the non-performance of its counterparties, there are no significant concentrations of credit risk and the Corporation does not consider this to be a material risk. The Corporation’s customers with whom the current business operations are with include government bodies and reputable businesses. For its trade receivables, the Corporation applies the simplified approach for determining expected credit losses, which require the Corporation to determine the lifetime, expected losses for all its trade receivables. The expected lifetime credit loss provision for its trade receivables is based on historical counterparty default rates and adjusted for relevant forward-looking information, when required. Because of factors including that its customers are considered to have low default risk, the historical default rates are low and the lifetime expected credit loss allowance for trade receivables is nominal as at March 31, 2020. Accordingly, the Corporation did not record any adjustment relating to the implementation of the expected credit loss model for its trade receivables.

All of Alexco’s property, plant and equipment and mineral properties are located in Canada and all of its mining operations and mineral exploration occur in Canada. Also, while a significant majority of the Corporation’s operating costs are denominated in Canadian dollars, it does have some exposure to costs, and therefore accounts payable and accrued liabilities, denominated in US dollars.

The Corporation has not employed any hedging activities in respect of the prices for its payable metals or for its exposure to fluctuations in the value of the US dollar.

Off-Balance Sheet Arrangements

Alexco has no off-balance sheet arrangements as defined by National Instrument 52-109.

Related Party Transactions

The Corporation’s related parties include its subsidiaries and key management personnel. Key management includes the Corporation’s Board of Directors and members of senior management. Key management compensation for Q1 2020 and Q1 2019 was as follows:

Alexco Resource Corp. | 12  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

	Three Months ended March 31,
	2020		2019
Salaries and other short-term benefits	$	834	$	946
Share-based compensation		363		1,009
	$	1,197	$	1,955

On February 14, 2020, pursuant to the AEG Sale Agreement, Alexco sold AEG to AEG Management led by AEG’s President.

Critical Accounting Estimates and Judgments

The Corporation’s significant accounting policies as well as significant judgment and estimates are presented in Notes 3 and 5 of Alexco’s December 31, 2019 annual consolidated financial statements.

Non-GAAP Measures

The Corporation presents non-GAAP measures, which are not defined in IFRS. A description and calculation of the measures are given below and may differ from similarly named measures provided by other issuers. We disclose these measures because we believe it assists readers in understanding Alexco’s financial position. These measures should not be considered in isolation or used in substitute for other measures prepared in accordance with IFRS.

Net Working Capital

Consolidated net working capital comprises those components of current assets and liabilities which support and results from the Corporation’s ongoing running of its current operations. It is provided to give a quantifiable indication of the Corporation’s short-term cash generation ability and business efficiency. As a measure linked to current operations and sustainability of the business, net working capital includes: cash and cash equivalents, accounts and other receivables, investments, inventories, and prepaids expenses and other, less accounts payable and accrued liabilities, lease liabilities, and environmental services contract loss provision. Excluded components are deferred revenue and flow-through share premium pending renunciation.

Internal Control Over Disclosure Controls and Procedures and Financial Reporting

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the accounting principles under which the Corporation’s financial statements are prepared. As required under National Instrument 52-109, management advises that during the quarter, the Corporation’s employees began working remotely from home. This change has required certain processes and controls that were previously done or documented manually to be completed and retained in electronic form. Despite the changes required by the current environment, there have been no significant changes in the Corporation’s internal control over financial reporting during the quarter ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

Risk Factors

Except as set forth below, there have been no material changes to the risk factors set forth in Alexco Annual Information Form for the year ended December 31, 2019. The risk factors included in our Annual Information Form for the year ended December 31, 2019, in addition to the other information set forth in this MD&A, could materially affect our business, financial condition or results of operations. Additional risks and uncertainties not currently known to us or that we deem to be immaterial could also materially adversely affect our business, financial condition or results of operations.

Alexco Resource Corp. | 13  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

The outbreak of the coronavirus (COVID-19) may affect our operations.

The Corporation faces risks related to health epidemics and other outbreaks of communicable diseases, which could significantly disrupt its operations and may materially and adversely affect its business and financial conditions.

Alexco’s business could be adversely impacted by the effects of the coronavirus or other epidemics. In December 2019, a novel strain of the coronavirus emerged and infections have been reported globally. The extent to which the coronavirus impacts the Corporation’s business, including its operations and the market for its securities, will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the coronavirus outbreak. In particular, the continued spread of the coronavirus could impact the Corporation’s business including without limitation, employee health, workforce productivity, increased insurance premiums, limitations on travel, the availability of industry experts and personnel, restrictions or delays to the exploration or development activities at Keno Hill, and other factors that will depend on future developments beyond the Corporation’s control, which may have a material and adverse effect on the business, financial condition, results of operations, access to future capital, and valuation of long-lived assets.

There can be no assurance that the Corporation's personnel will not be impacted by these pandemic diseases and ultimately see its workforce productivity reduced or incur increased medical costs or insurance premiums as a result of these health risks.

In addition, a significant outbreak of coronavirus could result in a widespread global health crisis that could adversely affect global economies and financial markets resulting in an economic downturn that could have an adverse effect on the demand for precious metals and our future prospects.

Alexco Resource Corp. | 14  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

Summary of Mineral Reserve and Resource Estimates

The following tables sets forth the estimated probable mineral reserves and estimated mineral resources for Alexco’s mineral properties within the KHSD:

Summary of Probable Mineral Reserve Estimates

Category 1,2,4	Property	Tonnes	Ag   (g/t)	Au (g/t)	Pb (%)	Zn (%)	Contained Ag (oz)
Probable	Bellekeno3	40,109	843	-	11.8	6.3	1,087,000
	Lucky Queen3	70,717	1,244	0.12	2.6	1.4	2,828,000
	Flame & Moth3	704,211	672	0.49	2.7	5.7	15,215,000
	Bermingham3	362,343	972	0.13	2.6	1.3	11,323,000
Total Probable Mineral Reserves		1,177,380	804	0.34	3.0	4.1	30,453,000

Notes:

1. All mineral reserves for this table have the effective date of March 28, 2019 and are classified following the CIM Definition Standards for Mineral Resources and Mineral Reserves (May 2014), in accordance with the CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines and the guidelines of NI 43-101.

2. All numbers have been rounded to reflect the relative accuracy of the estimates.

3. The Bellekeno, Lucky Queen, Flame & Moth and Bermingham deposits are incorporated into the current mine plan supported by disclosure in the news release dated March 28, 2019 entitled “Alexco Announces Positive Pre-Feasibility Study for Expanded Silver Production at Keno Hill Silver District” and the PFS filed on SEDAR dated February 13, 2020 with an effective date of March 28, 2019.

4. The disclosure regarding the summary of probable mineral reserves for Alexco’s mineral properties within the Keno Hill District has been reviewed and approved by Neil Chambers, P.Eng., Mine Superintendent and a Qualified Person as defined by NI 43-101.

Summary of Indicated and Inferred Mineral Resource Estimates

(Indicated mineral resources are inclusive of probable mineral reserve estimates)

Category 1,2,3,7,9	Property	Tonnes	Ag (g/t)	Au (g/t)	Pb  (%)	Zn (%)	Contained Ag (oz)
Indicated	Bellekeno2,4&5 Lucky Queen2,4&6 Flame & Moth2,4&6 Onek4&6 Bermingham2,4&5	262,000 132,300 1,679,000 700,200 1,102,300	585 1,167 498 191 930	n/a 0.2 0.4 0.6 0.1	3.5 2.4 1.9 1.2 2.4	5.3 1.6 5.3 11.9 1.7	4,928,000 4,964,000 26,883,000 4,300,000 32,959,000
Total Indicated Sub-Surface Deposits		3,875,800	594	0.3	2.0	5.3	74,034,000
	Elsa Historical Tailings7	2,490,000	119	0.1	1.0	0.7	9,527,000
Total Indicated All Deposits		6,365,800	408	0.3	1.6	3.5	83,561,000
Inferred	Bellekeno4&5 Lucky Queen4&6 Flame & Moth4&6 Onek4&6 Bermingham4&5	243,000 257,900 365,200 285,100 509,400	428 473 356 118 717	n/a 0.1 0.3 0.4 0.2	4.1 1.0 0.5 1.2 1.7	5.1 0.8 4.3 8.3 1.5	3,344,000 3,922,000 4,180,000 1,082,000 11,743,000
Total Inferred		1,660,600	455	0.2	1.6	3.7	24,271,000

Notes:

1. All mineral resources, except the Elsa Historical Tailings Resource, are classified following the CIM Definition Standards for Mineral Resources and Mineral Reserves (May 2014) of NI 43-101.

2. Indicated mineral resources are inclusive of mineral reserves estimates.

3. Mineral resources are not all mineral reserves and do not have demonstrated economic viability. All numbers have been rounded to reflect the relative accuracy of the estimates.

4. The mineral resource estimates comprising Bellekeno, Lucky Queen and Flame & Moth, Onek and Bermingham are supported by disclosure in the news release dated March 28, 2019 entitled “Alexco Announces Positive Pre-Feasibility Study for Expanded Silver Production at Keno Hill Silver District” and the technical report filed on SEDAR dated February 13, 2020 with an effective date of March 28, 2019.

5. The mineral resource estimate for the Bermingham and Bellekeno deposits are based on mineral resource estimates having an effective date of March 28, 2019. The Bellekeno deposit has been depleted to reflect all mine production from the Bellekeno mine to date.

6. The mineral resource estimate for the Lucky Queen, Flame & Moth and Onek deposits have an effective date of January 3, 2017.

7. The mineral resource estimate for the Elsa Tailings has an effective date of April 22, 2010 and is supported by the technical report dated June 16, 2010 entitled “Mineral Resource Estimation, Elsa Tailings Project, Yukon, Canada”. The Elsa Historical Tailings Resource is classified following the CIM Definition Standards for Mineral Resources and Mineral Reserves (December 2005 of NI 43-101.

Alexco Resource Corp. | 15  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

8. The disclosure regarding the summary of estimated mineral resources for Alexco’s mineral properties within the Keno Hill District has been reviewed and approved by Dr. Gilles Arseneau, P.Geo (Lucy Queen, Flame & Moth, and Onek deposits), Cliff Revering, P.Eng (Bermingham deposit), and David Farrow, P.GEO.PrSciNat (Bellekeno deposit), Qualified Persons as defined by NI 43-101.

Summary of Historical Resource Estimates

		Tonnes	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)	Contained Ag (oz)
Historical Resources	Silver King1,2
	- Proven, probable and indicated	99,000	1,354	n/a	1.6%	0.1%	4,310,000
	- Inferred	22,500	1,456	n/a	0.1%	n/a	1,057,000

Notes:

1. Historical resources for Silver King were estimated by UKHM, as documented in an internal report entitled “Mineral Resources and Mineable Ore Reserves” dated March 9, 1997. The historical resources were estimated based on a combination of surface and underground drill holes and chip samples taken on the vein and calculated using the polygonal (block) model and the 1997 CIM definitions for resource categories. Verification of the estimate would require new drill holes into a statistically significant number of the historical resource blocks and/or a combination of on-vein sampling. A Qualified Person (as defined by NI 43-101) has not done sufficient work to classify this estimate of historical resources as current mineral resources or mineral reserves, nor is Alexco treating this historical estimate as current mineral resources or mineral reserves.

2. The disclosure regarding the summary of historical mineral resources for Alexco’s mineral properties within the Keno Hill District has been reviewed and approved by Neil Chambers, P.Eng., Mine Superintendent and a Qualified Person as defined by NI 43-101.

Alexco Resource Corp. | 16  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

Cautionary Statement Regarding Forward-Looking Statements

This MD&A contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian securities laws (together, “forward-looking statements”) concerning the Corporation's business plans, including but not limited to anticipated results and developments in the Corporation’s operations in future periods, planned exploration and development of its mineral properties, plans related to its business and other matters that may occur in the future, made as of the date of this MD&A.

Forward-looking statements may include, but are not limited to, statements with respect to future remediation and reclamation activities, future mineral exploration, the estimation of mineral reserves and mineral resources, the realization of mineral reserve and mineral resource estimates, future mine construction and development activities, future mine operation and production, the timing of activities, the requirements for additional capital and sources and uses of funds. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “estimates”, “intends”, “strategy”, “goals”, “objectives” or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be “forward-looking statements”.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements. Such factors include, but are not limited to, risks related to actual results and timing of exploration and development activities; actual results and timing of mining activities; actual results and timing of environmental services operations; actual results and timing of remediation and reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of silver, gold, lead, zinc and other commodities; possible variations in mineable resources, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; First Nation rights and title; continued capitalization and commercial viability; global economic conditions; competition; and delays in obtaining governmental approvals or financing or in the completion of development activities. Furthermore, forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Corporation or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to those referred to in this MD&A under the heading “Risk Factors” and elsewhere.

Forward-looking statements are based on certain assumptions that management believes are reasonable at the time they are made. In making the forward-looking statements included in this MD&A, the Corporation has applied several material assumptions, including, but not limited to, the assumption that: (1) additional financing needed for the capacity related refund under the silver purchase agreement with Wheaton will be available on reasonable terms; (2) additional financing needed for the capacity related refund under the SPA with Wheaton will be available on reasonable terms; (3) additional financing needed for further exploration and development work on the Corporation's properties will be available on reasonable terms; (4) the proposed development of its mineral projects will be viable operationally and economically and proceed as planned; (5) market fundamentals will result in sustained silver, gold, lead and zinc demand and prices, and such prices will not be materially lower than those estimated by management in preparing the interim condensed consolidated financial statements for the three month period ended March 31, 2020; (6) market fundamentals will result in sustained silver, gold, lead and zinc demand and prices, and such prices will be materially consistent with or more favourable than those anticipated in the PFS (as defined under "Description of the Business – KHSD Property"); (7) the actual nature, size and grade of its mineral resources are materially consistent with the resource estimates reported, including the PFS; (8) labor and other industry services will be available to the Corporation at prices consistent with internal estimates; (9) the continuances of existing and, in certain circumstances, proposed tax and royalty regimes; and (10) that other parties will continue to meet and satisfy their contractual obligations to the Corporation. Statements concerning mineral reserve and resource estimates may also be deemed to constitute forward-looking information to the extent that they involve estimates of the mineralization that will be encountered if the property is developed. Other material factors and assumptions are discussed throughout this MD&A and, in particular, under both “Critical Accounting Estimates” and “Risk Factors”.

Alexco Resource Corp. | 17  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

The Corporation's forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made and should not be relied on as representing the Corporation's views on any subsequent date. While the Corporation anticipates that subsequent events may cause its views to change, the Corporation specifically disclaims any intention or any obligation to update forward-looking statements if circumstances or management's beliefs, expectations or opinions should change, except as required by applicable law. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

Technical Disclosure Cautionary Note to U.S. Investors – Information Concerning Preparation of Resource Estimates

The material scientific and technical information in respect of Alexco’s KHSD project in the MD&A, unless otherwise indicated is based upon the information contained in the PFS. Readers are encouraged to read the PFS, which is available under the Corporation’s profile on SEDAR, for detailed information concerning KHSD. All disclosure contained in this MD&A regarding the mineral reserves and mineral resource estimates and economic analysis on the property is fully qualified by the full disclosure contained in the PFS.

A production decision which is made without a feasibility study of mineral reserves demonstrating economic and technical viability carries additional potential risks which include, but are not limited to, the risk that additional detailed work may be necessary with respect to mine design and mining schedules, metallurgical flow sheets and process plant designs, and the noted inherent risks pertaining to the inclusion of approximately 2% Inferred Mineral Resources (as defined herein) in the mine plan.

This MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of United States securities laws. The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards for Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the United States Securities and Exchange Commission’s (“SEC”) Industry Guide 7 under the United States Securities Act of 1933, as amended. Under SEC Industry Guide 7, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves, and all necessary permits and government authorizations must be filed with the appropriate governmental authority.

In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that all or any part of a mineral deposit in these categories will ever be converted into SEC Industry Guide 7 reserves. Under Canadian rules, Inferred Mineral Resources (as defined herein) can only be used in economic studies as provided under NI 43-101. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an Inferred Mineral Resource exists or is economically or legally mineable. An “Inferred Mineral Resource” is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource (as defined herein) and must not be converted to a mineral reserve. It is reasonably expected that the majority of inferred mineral resources could be upgraded to indicated mineral resources with continued exploration. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.

Alexco Resource Corp. | 18  

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2020

Accordingly, information concerning mineral deposits contained in this MD&A may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

The SEC has adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC. These amendments became effective February 25, 2019 (the “SEC Modernization Rules”) and, following a two-year transition period, the SEC Modernization Rules will replace the historical property disclosure requirements for mining registrants that are included in SEC Industry Guide 7. Following the transition period, as a foreign private issuer that files its annual report of Form 40-F with the SEC pursuant to the multi-jurisdictional disclosure system, the Company is not required to provide disclosure on its mineral properties under the SEC Modernization Rules and will continue to provide disclosure under NI 43-101 and the CIM Definition Standards. If the Company ceases to be a foreign private issuer or lose its eligibility to file its annual report on Form 40-F pursuant to the multi-jurisdictional disclosure system, then the Company will be subject to the SEC Modernization Rules which differ from the requirements of NI 43-101 and the CIM Definition Standards.

Additional Information

Additional information relating to Alexco, including Alexco’s Annual Information Form for the year ended December 31, 2019 can be found on the Corporation’s profile on SEDAR at www.sedar.com.

Alexco Resource Corp. | 19  

EX-99.3

Exhibit 99.3

Form 52-109F2

Certification of interim filings - full certificate

I, Clynton Nauman, Chairman and Chief Executive Officer of Alexco Resource Corp., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Alexco Resource Corp. (the “issuer”) for the interim period ended March 31, 2020.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2020 and ended on March 31, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 13, 2020

“Clynton Nauman”

_______________________

Clynton Nauman

Chairman and Chief Executive Officer

EX-99.4

Exhibit 99.4

Form 52-109F2

Certification of interim filings - full certificate

I, Michael Clark, Chief Financial Officer of Alexco Resource Corp., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Alexco Resource Corp. (the “issuer”) for the interim period ended March 31, 2020.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2020 and ended on March 31, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 13, 2020

“Michael Clark”

_______________________

Michael Clark

Chief Financial Officer