The company is suspending ore extraction and milling operations until January 2023 so that it can focus on advancing the underground development.

"As previously indicated in May, our operations ramp-up plan is running well behind schedule and at this juncture we have enough information to determine that the rate of improvement in underground performance is not sufficient to reach a sustainable 400 tpd and cash self sufficiency in 2022," Alexeco's chairman and CEO Clynton Nauman said.

The performance has demonstrated supply of just 150,00-250,000tpd of ore to the mill.

The company's share price slumped 42% day on day to C$0.60 (US$0.46) on June 22. In the past three months, it has fallen from more than C$2.50.

"With a clear lack of operational execution, a near-term financing overhang, and an outstanding proof of concept, Alexco, in our view, is a show-me story," Canaccord Genuity Capital Markets analyst Kevin MacKenzie said.

CG lowered its target price for Alexco from C$2.75 to C$1.25.

"While our adjusted target reflects a premium to market, we struggle to recognize a near-term investment thesis beyond a potential acquisition premium. As such, we now rate Alexco HOLD, from Speculative Buy previously," he said.

Mackenzie said the company has a number of attractive aspects as an acquisition target for "an experienced and capitalized silver producer", including the fact that the project is permitted with established infrastructure, has a high grade profile, and district scale upside.

"That said, we suspect that any potential M&A would likely be centered on renegotiating the project's silver stream (25% Ag payable), which is held by Wheaton Precious Metals," he added.

Alexco also said that the change in plans will require additional financing.

The company's cash position is about C$14 million with negative working capital of around C$4.5 million.

"The final scope, cost, and timing of the interim development-only plan and the subsequent transition back to full mill operations and concentrate shipments in January 2023 remains under review and will be communicated once completed," Alexco said.

"Additionally, the company will continue to evaluate all financing and strategic options available to enhance the value of Keno Hill," it said.

Alexco has a market capitalization of C$7.63 million.