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Matthew OKeefe, M.Sc. , MBA, (416) 943-6705; mokeefe@cormarRajbi r Gi l l Associate, (416) 943-6729; rgill@cormark

SPECIAL ALAUGUST 23,

During the past twenty-four months, Cormark Securities Inc., either onown or as a syndicate member, participated in the underwriting of securitie

Alexco Resource Corp.

Our disclosure statements are located at the end of this report

Recommendation : Buy (S)

Target Price:$5.00

Alexco Resource Corp. (AXR-TSX, AXU-NYSE)

Fully Permitted And On Track to Start ProductioCurrent Price $3.58 Shares Outstanding (MM)

52 Wk High $4.45 Basic

52 Wk Low $2.24 Diluted

Cash (MM) $30.2 Mngt. & Dir.

Total Debt (MM) $0.0 Market Cap.

NAVPS $2.70 Float

Price/NAV 1.3x EV

Dividend $0.00 Reserves

Dividend Yield 0.0% P&P+M&I+Inf

F2009E F2010E F2011ESilver Eq. Prod. Q1 0.0 A 0.0 A 0.3

MMoz) Q2 0.0 A 0.0 A 0.9

Q3 0.0 A 0.0 A 1.0

Q4 0.0 A 0.0 1.1

FY 0.0 A 0.0 3.3

Diluted EPS, adj. FY $(0.23) A $(0.09) $0.15

Diluted CFPS, adj. Q1 $(0.02) A $(0.01) A $0.05

Q2 $(0.04) A $(0.03) A $0.12

Q3 $(0.03) A $(0.02) A $0.15

Q4 $(0.02) A $(0.00) $0.15

FY $(0.11) A $(0.06) $0.47

EV/Prod. 46.0

EV/Resource 11.8x

P/CF 7.3x 7.6x

Fiscal YE June 30

3.0

$190.1

53.1

0.0 MMoz

13.0 MMoz

$179.3

$153.5

54.3

Unless otherwise denoted, all figures shown in C$

Investment Thesis:Alexco Resource Corp. is working to bring the historic and prolific Kenosilver mining district back into production. Its most advanced project indistrict is the Bellekeno mine, a small high grade underground operatiotrack to begin production in Q3/C10. Although the current resource suppomodest mine life of just four years, we expect this will be extended significthrough Alexcos aggressive exploration efforts. Given that the Kenodistrict is host to some of the highest grade silver deposits in the world

envisage Bellekeno being the first of several producing mines in Kenodistrict.

Highlights:

Receives Type A Water Use LicenceThis morning, Alexco announced it had been issued a Type A Water Licence for its wholly owned Bellekeno mine and mill project in Keno Hill. this key permit firmly in-hand, the company is clear to commence operations and concentrate production from its Bellekeno mine and mill.

Bellekeno Approaches Start-upThe Bellekeno mine, which is AXRs first in the Keno Hill district, ischedule for completion and commissioning within the next six weeks.operation is expected to represent only the first in a series of mines ascompany develops additional resources in the prolific Keno Hill district.

Maintaining Buy (S) Recommendation and $5.00 Target Alexco remains firmly on track to commercial production at BellekenQ3/C2010. We continue to recommend Alexco for its near-term producstrong growth profile and significant exploration potential. An aggresummer drilling program targeting resources in and around historic depshould provide strong news flow for the balance of the year. Our Buy (S) rand $5.00 target price remains unchanged.

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Matthew OKeefe, M.Sc. , MBA, (416) 943-6705; mokeefe@cormarRajbi r Gi l l Associate, (416) 943-6729; rgill@cormark

SPECIAL ALAUGUST 23,

Our disclosure statements are located at the end of this report

Critical Water License Now In Hand: This morning, Alexco announced that it had been issued its A Water Use License for its wholly owned Bellekeno mine and mill project in the Keno Hill Silver distr

the Yukon. Recall that receipt of the license is s a critical step item as it clears the way for the use of win the milling process, namely in the production of concentrate. With the receipt of Water License Q092, the operation is fully permitted just ahead of construction completion and mill commissioning, wis expected within the next six weeks.

On Track for Commercial Production: The Company also provided an update on developactivities noting it has incurred 60% or $24.9MM of the original $41.5MM capital cost estimateestimates physical mine and mill construction is 81% and 68% complete respectively. Post our recentour, we came away impressed and fully expect the company to meet its target for Q3/C10 produstart (see Site Visit Reaffirms Potential at Keno Hill). The Bellekeno operation has been previscoped as a 250tpd operation, capable of producing +2MMoz of silver with negative cash costs net oproduct credits. As such, we expect AXR to take advantage of 158tpd of additional throughput capa

allowing for increasingly higher levels of production, approaching the 3MMoz Ag mark. This expansiexpected to be fuelled by the ongoing drill program, which aims to delineate additional resources inaround the Bellekeno mine. In all, we expect AXR to be capable of producing over 4MMoz Ag annfrom several deposits over the longer term.

Exploration to Add High Margin Ounces: Given that parts of Bellekeno and nearby deposits gradeover 1,000g/t Ag, exploration efforts are expected to continue defining high margin ounces. As suchcontinue to see material upside beyond the mines currently defined resource of 13MMoz Ag 91MMlbs Pb, and 101MMlbs Zn). Alexcos 2010 exploration program has a $12MM budget for s20,000-25,000m of drilling. The strategy as defined by management is three fold, with drilling expecti) Expand/Define known resources, ii) test the extension of known mineralized trends and iii) test poteblind targets in previously unexplored areas. The most advanced deposits include Lucky Queen and SKing, both of which have produced historically, at grades of over 1,300g/t. As such, we have incorpo

approximately 12MMoz of additional Ag upside into our valuation (conservative relative to managetargets) with potential for production in H2/C12. This, in addition to potential mid-term production fromElsa Tailings project should continue to increase silver production. Over the longer term, upside fromdelineation of other historically producing deposits should continue to support the companys growth.

News Flow to Remain Strong as Production About to Commence: In the near term, we expecfollowing 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 eand comes just ahead of the expected commissioning of the Bellekeno mine and mill. The stock onear term production with robust cash flow, a strong production growth profile and significant explorupside potential. We continue to recommend Alexco with a BUY (S) rating and C$5.00 target price bon a blended target of 11x F2011 CFPS and 1.0x our NAVPS estimate.

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

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Matthew OKeefe, M.Sc. , MBA, (416) 943-6705; mokeefe@cormarRajbi r Gi l l Associate, (416) 943-6729; rgill@cormark

SPECIAL ALAUGUST 23,

Our disclosure statements are located at the end of this report

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SPECIAL ALAUGUST 23,

RECOMMENDATION TERMINOLOGY

Cormarks recommendation terminology is as follows:Top Pick our best investment ideas, the greatest potential value appreciationBuy expected to outperform its peer groupMarket Perform expected to perform with its peer groupReduce 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.

or Canadian Residents: This report has been approved by Cormark Securities Inc. (CSI), member IIROC and CIPF, which tesponsibility for this report and its dissemination in Canada. Canadian clients wishing to effect transactions in any security discussed shouo through a qualified salesperson of CSI. For US Residents: Cormark Securities (USA) Limited (CUSA), member FINRA and SIPC, accesponsibility for this report and its dissemination in the United States. This report is intended for distribution in the United States only to censtitutional investors. US clientswishing to effect transactions in any security discussed should do so through a qualified salesperson ofCU

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