Matthew O’Keefe, M.Sc., MBA, (416) 943-6705; mokeefe@cormark.

com
Rajbir Gill – Associate, (416) 943-6729; rgill@cormark.com

SPECIAL ALERT
AUGUST 23, 2010

Recommendation: Buy (S)

‹
Alexco Resource Corp. (AXR-TSX, AXU-NYSE)
Target Price: $5.00 Fully Permitted And On Track to Start Production
Current Price $3.58 Shares Outstanding (MM) Unless otherwise denoted, all figures shown in C$
52 Wk High $4.45 Basic 53.1
52 Wk Low $2.24 Diluted 54.3
Investment Thesis:
Alexco Resource Corp. is working to bring the historic and prolific Keno Hill
Cash (MM) $30.2 Mngt. & Dir. 3.0
silver mining district back into production. Its most advanced project in the
Total Debt (MM) $0.0 Market Cap. $190.1
district is the Bellekeno mine, a small high grade underground operation on
NAVPS $2.70 Float $179.3
track to begin production in Q3/C10. Although the current resource supports a
Price/NAV 1.3x EV $153.5
modest mine life of just four years, we expect this will be extended significantly
Dividend $0.00 Reserves 0.0 MMoz
through Alexco’s aggressive exploration efforts. Given that the Keno Hill
Dividend Yield 0.0% P&P+M&I+Inf 13.0 MMoz district is host to some of the highest grade silver deposits in the world we
Fiscal YE June 30 F2009E F2010E F2011E envisage Bellekeno being the first of several producing mines in Keno Hill
Silver Eq. Prod. Q1 0.0 A 0.0 A 0.3 district.
(MMoz) Q2 0.0 A 0.0 A 0.9
Highlights:
Q3 0.0 A 0.0 A 1.0
Q4 0.0 A 0.0 1.1 • Receives Type A Water Use Licence
FY 0.0 A 0.0 3.3 This morning, Alexco announced it had been issued a Type A Water Use
Diluted EPS, adj. FY $(0.23) A $(0.09) $0.15 Licence for its wholly owned Bellekeno mine and mill project in Keno Hill. With
Diluted CFPS, adj. Q1 $(0.02) A $(0.01)A $0.05 this key permit firmly in-hand, the company is clear to commence mine
Q2 $(0.04) A $(0.03)A $0.12 operations and concentrate production from its Bellekeno mine and mill.
Q3 $(0.03) A $(0.02)A $0.15 • Bellekeno Approaches Start-up
Q4 $(0.02) A $(0.00) $0.15 The Bellekeno mine, which is AXR’s first in the Keno Hill district, is on
FY $(0.11) A $(0.06) $0.47 schedule for completion and commissioning within the next six weeks. The
EV/Prod. 46.0 operation is expected to represent only the first in a series of mines as the
EV/Resource 11.8x company develops additional resources in the prolific Keno Hill district.
P/CF 7.3x 7.6x
• Maintaining Buy (S) Recommendation and $5.00 Target
Alexco remains firmly on track to commercial production at Bellekeno by
Q3/C2010. We continue to recommend Alexco for its near-term production,
strong growth profile and significant exploration potential. An aggressive
summer drilling program targeting resources in and around historic deposits
should provide strong news flow for the balance of the year. Our Buy (S) rating
and $5.00 target price remains unchanged.

‹
During the past twenty-four months, Cormark Securities Inc., either on its
own or as a syndicate member, participated in the underwriting of securities for
Alexco Resource Corp.
Our disclosure statements are located at the end of this report
 Matthew O’Keefe, M.Sc., MBA, (416) 943-6705; mokeefe@cormark.com
Rajbir Gill – Associate, (416) 943-6729; rgill@cormark.com

SPECIAL ALERT
AUGUST 23, 2010

Critical Water License Now In Hand: This morning, Alexco announced that it had been issued its Type
A Water Use License for its wholly owned Bellekeno mine and mill project in the Keno Hill Silver district in
the Yukon. Recall that receipt of the license is s a critical step item as it clears the way for the use of water
in the milling process, namely in the production of concentrate. With the receipt of Water License QZ09-
092, the operation is fully permitted just ahead of construction completion and mill commissioning, which
is expected within the next six weeks.
On Track for Commercial Production: The Company also provided an update on development
activities noting it has incurred 60% or $24.9MM of the original $41.5MM capital cost estimate and
estimates physical mine and mill construction is 81% and 68% complete respectively. Post our recent site
tour, we came away impressed and fully expect the company to meet its target for Q3/C10 production
start (see “Site Visit Reaffirms Potential at Keno Hill”). The Bellekeno operation has been previously
scoped as a 250tpd operation, capable of producing +2MMoz of silver with negative cash costs net of by-
product credits. As such, we expect AXR to take advantage of 158tpd of additional throughput capacity,
allowing for increasingly higher levels of production, approaching the 3MMoz Ag mark. This expansion is
expected to be fuelled by the ongoing drill program, which aims to delineate additional resources in and
around the Bellekeno mine. In all, we expect AXR to be capable of producing over 4MMoz Ag annually
from several deposits over the longer term.
Exploration to Add High Margin Ounces: Given that parts of Bellekeno and nearby deposits grade well
over 1,000g/t Ag, exploration efforts are expected to continue defining high margin ounces. As such, we
continue to see material upside beyond the mine’s currently defined resource of 13MMoz Ag (plus
91MMlbs Pb, and 101MMlbs Zn). Alexco’s 2010 exploration program has a $12MM budget for some
20,000-25,000m of drilling. The strategy as defined by management is three fold, with drilling expected to
i) Expand/Define known resources, ii) test the extension of known mineralized trends and iii) test potential
blind targets in previously unexplored areas. The most advanced deposits include Lucky Queen and Silver
King, both of which have produced historically, at grades of over 1,300g/t. As such, we have incorporated
approximately 12MMoz of additional Ag upside into our valuation (conservative relative to management
targets) with potential for production in H2/C12. This, in addition to potential mid-term production from the
Elsa Tailings project should continue to increase silver production. Over the longer term, upside from the
delineation of other historically producing deposits should continue to support the company’s growth.
News Flow to Remain Strong as Production About to Commence: In the near term, we expect the
following deliverables to act as additional catalysts for AXR:
• Initial and Commercial Production at Bellekeno (Q3 C2010)
• Results from Infill and Extensional Drilling (Ongoing)
• Exploration results from drilling new targets (H2 C2010)
• The PEA for the Elsa Tailings project (Q3 C2010)
• Resource Updates on Silver King, Lucky Queen and possibly Onek (Early C2011)
Target and Recommendation Maintained: The receipt of the water permit is a material de-risking event
and comes just ahead of the expected commissioning of the Bellekeno mine and mill. The stock offers
near term production with robust cash flow, a strong production growth profile and significant exploration
upside potential. We continue to recommend Alexco with a BUY (S) rating and C$5.00 target price based
on a blended target of 11x F2011 CFPS and 1.0x our NAVPS estimate.

We, Matthew O’Keefe and Rajbir Gill, hereby certify that the views expressed in this research report accurately reflect our personal views about the
subject company(ies) and its (their) securities. We also certify that we have not been, and will not be receiving direct or indirect compensation in
exchange for expressing the specific recommendation(s) in this report.

Our disclosure statements are located at the end of this report

 Matthew O’Keefe, M.Sc., MBA, (416) 943-6705; mokeefe@cormark.com
Rajbir Gill – Associate, (416) 943-6729; rgill@cormark.com

SPECIAL ALERT
AUGUST 23, 2010

Our disclosure statements are located at the end of this report

 SPECIAL ALERT
AUGUST 23, 2010

RECOMMENDATION TERMINOLOGY
Cormark’s recommendation terminology is as follows:
Top Pick our best investment ideas, the greatest potential value appreciation
Buy expected to outperform its peer group
Market Perform expected to perform with its peer group
Reduce expected to underperform its peer group
Our ratings may be followed by "(S)" which denotes that the investment is speculative and has a higher degree of risk associated with it.
Additionally, our target prices are set based on a 12-month investment horizon.

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