FNX Mining Company Inc.
TSX : FNX

FNX Mining Company Inc.

March 30, 2009 06:00 ET

2008 Write Downs Result in $389 Million Loss for FNX

TORONTO, ONTARIO--(Marketwire - March 30, 2009) - FNX Mining Company Inc. (TSX:FNX) ("FNX" or "the Company") reports financial and operational results for fiscal 2008 and the fourth quarter of 2008. Net losses for the 2008 full year and fourth quarter were $388.5 million ($4.59 per share) and $397.4 million ($4.68 per share) respectively, including non-cash and unusual items of $509.8 million and $499.6 million respectively ($370.4 million and $365.0 million net of taxes, respectively). Unusual items include property, plant and equipment and intangible assets impairment write downs, as well as gains and losses on investments. Excluding unusual items, operating net losses for the 2008 full year and fourth quarter were $10.1 million ($0.12 per share) and $32.6 million ($0.38 per share). Included in the 2008 full year and fourth quarter earnings were negative provisional metal pricing adjustments of $41.6 million and $24.4 million respectively, compared to positive $7.0 million and $nil respectively in 2007.

Production from its 100%-owned Sudbury, Ontario mines generated revenues of $245.0 million for the year and $27.3 million for the fourth quarter, compared to $267.8 million and $51.3 million respectively in 2007. Consolidated revenues, which include results from the 100%-owned DMC Mining Services business ("DMC"), were $378.1 million for the full year and $48.7 million for the fourth quarter, compared to $322.0 million and $105.6 million respectively in 2007. Cash flow from consolidated results for the full year and fourth quarter was $77.2 million ($0.91 per share) and $8.0 million ($0.09 per share) respectively, compared to operating cash flow of $167.2 million ($1.99 per share) and $50.9 million ($0.60 per share) in 2007. Consolidated adjusted EBITDA was $46.5 million for the full year and ($28.6) million for the fourth quarter, compared to $147.7 million and $24.5 million respectively in 2007.

Terry MacGibbon, Chairman and CEO of FNX noted that, "FNX was dramatically impacted by the rapid commodity price decline and economic downturn in 2008. As a result, we made difficult and prudent decisions in the fourth quarter of 2008 and suspended all primary nickel production, lowered overall production and reduced capital expenditures by $70 million. The dramatic decline in commodity prices and the resulting reduction in production and employee layoffs have resulted in a non-cash asset impairment pre-tax write down of $509.8 million. Although considered impaired at long term commodity prices, our former producing deposits are on stand-by and could, at higher commodity prices, be quickly put back into production and have significant value."

Mr. MacGibbon added, "The Company continues in these difficult times with a strong balance sheet, zero debt, a comprehensive plan to tightly control costs and expenditures and continues to focus on its high margin Levack Footwall Deposit development. Our challenges in 2009 are to control costs and concentrate on ore deposits which are cash positive or at least cash neutral, even at current low commodity prices. We will continue to focus on achieving the planned 2010 start up of the high grade Levack Footwall Deposit thereby positioning the Company for success when the economy improves and we see higher commodity prices."

The average cash revenues per ton of ore shipped for full year 2008 and the fourth quarter were $195 and $100, respectively, while the average operating cash costs per ton shipped were $160 and $206 respectively, leaving an average cash operating margin per ton of ore shipped of $35 and ($106), respectively. The average realized revenue per ton in the fourth quarter was negatively impacted by the provisional price adjustments of $90 per ton. The higher average cash cost per ton shipped in the fourth quarter resulted primarily from cessation of nickel development resulting in increased fixed costs being attributed to nickel ore production and one time severance payments related to employee terminations and layoffs in the fourth quarter.



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Table 1 - Financial and Operating
Highlights Q4 2008 Q4 2007 2008 2007

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Consolidated
------------
Revenue 48,723 105,616 378,062 322,043
Net Earnings (Loss) (C$000) (397,402) 32,280 (388,540) 109,947
Basic Earnings (Loss) per Share (C$) (4.68) 0.38 (4.59) 1.31
Fully Diluted Earnings per Share (C$) (4.68) 0.38 (4.59) 1.30
Cash and Cash Equivalents (C$000) 129,561 35,160 129,561 35,160
Cash Flow from Operations (C$000) 7,966 50,877 77,166 167,242
Cash Flow per Share (C$) 0.09 0.60 0.91 1.99
Diluted Cash Flow per Share (C$) 0.09 0.60 0.91 1.98
Adjusted EBITDA (C$000) (28,618) 24,522 46,481 147,720

Mining Operations
------------------
Total Revenue (C$000) 27,265 51,324 244,958 267,751
Cash Operating Costs (C$000) 55,983 25,443 200,570 100,317
Cash Operating Margin (C$000) (28,718) 25,881 44,388 167,434
Depreciation and Amortization
(C$000) 12,496 8,422 47,472 26,332
Operating Margin (C$000) (41,214) 17,459 (3,084) 141,102
Net Earnings (Loss) (C$000) (391,364) 31,041 (370,430) 108,708
Cash Flow From Operating
Activities (C$000) 278 39,589 68,699 155,957

Total Ore Sold (tons) 271,336 239,066 1,255,987 926,881
Nickel Ore Sold (tons) 103,629 182,160 682,681 631,217
Grade of Nickel Ore Sold (%Ni) 1.5 1.2 1.2 1.3
Payable Metal Sold - Nickel (000
lbs) 3,011 3,289 13,140 12,219
Copper Ore Sold (tons) 167,707 56,906 573,306 295,664
Grade of Copper Ore Sold (%Cu) 5.3 1.2 3.7 1.4
Payable Metal Sold - Copper (000
lbs) 11,501 1,994 35,214 9,611

Payable Metal Sold - Total
Precious Metals (oz) 16,801 5,063 52,034 24,380

Revenue per Ton Sold (C$) 100 215 195 289
Cash Operating Costs per Ton Sold (C$) 206 74 160 73
Cash Operating Margin per Ton Sold (C$) (106) 109 35 181

Realized Nickel Prices (US$/lb) 3.02 12.16 8.56 15.69
Realized Copper Prices (US$/lb) 0.66 2.94 2.53 3.27
Exchange Rate (C$ /US$) 1.21 0.98 1.07 1.07

DMC Mining Services
-------------------
Total Revenue (C$000) 21,458 54,292 133,104 54,292
Cash Operating Costs (C$000) 21,769 49,764 129,031 49,764
Cash Operating Margin (C$000) (311) 4,528 4,073 4,528
Net Earnings (Loss) (C$000) (6,038) 1,239 (18,110) 1,239
Cash Flow from Operating
Activities(C$000) 7,688 8,285 8,467 11,285
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Certain of the above items are considered to be non-GAAP performance
measures (see below).


Cash increased during 2008 by $94.4 million, primarily as a result of the $175 million of cash received from the Gold Wheaton Gold Corp. ("Gold Wheaton" or "GLW") transaction. Cash and cash equivalents and working capital were $129.6 million and $130.1 million, respectively, as at December 31, 2008 compared to $35.2 million and $70.2 million, respectively, as at December 31, 2007. Total assets were $853.9 million and the Company currently has no debt.

Operations

FNX's Sudbury operations delivered a record 1.255 million tons of ore to the third party mill in 2008, including 1.01 million tons from the Levack Complex and 0.24 million tons from the Podolsky Mine. Nickel ore shipped in 2008 totaled 682,681 tons and copper-precious metal ore shipped was 573,306 tons for an average daily production rate of approximately 3,400 tons. Payable metals for the year totaled 13.1 million pounds of nickel, 35.2 million pounds of copper, 18,495 ounces of platinum, 24,182 ounces of palladium, 9,357 ounces of gold and 166,027 pounds of cobalt. Included in the total production numbers was a 37,665 ton nickel ore batch test from Levack Mine shipped and processed in the fourth quarter. Excluded from the 2008 production numbers were 10,683 tons taken from a larger 15,027 ton pre-production bulk sample removed from the copper-precious metal Levack Footwall Deposit ("LFD") and shipped to third party processing facilities in July 2008. The average realized price per pound of nickel for the full year and fourth quarter was US$8.56 and US$3.02 respectively, while the average realized price per pound for copper was US$2.53 and US$0.66 respectively.

Late in 2008, FNX suspended all nickel mining from the Levack Complex and reduced Sudbury and head office staff and hourly employees by approximately 300 people. The nickel contact deposits do not contain any payable precious metals, therefore the suspension of nickel production does not affect FNX's precious metal production and its agreement with Gold Wheaton. The 2009 production plan calls for shipping a total of 679,000 tons of copper-precious metal ore from the McCreedy West PM and 700 deposits, the Levack Rob's Deposit and the Podolsky 2000 Deposit. Details of the 2009 production forecast (see News Release dated February 6, 2009) include the production of 372,000 tons of copper-precious metal ore from the Podolsky Mine and 280,000 tons of McCreedy West copper-precious metal ore and 27,000 tons of Rob's Deposit nickel-copper ore from the Levack Complex. The payable metal forecast for 2009 includes 3.7 million pounds of nickel, 35.2 million pounds of copper and 58,000 ounces of platinum, palladium and gold. All operations will be closely monitored during 2009 to ensure the continued economic viability of the Company. The Sudbury Operations will be re-evaluated regularly during the year to further reduce or re-start suspended operations in response to future metal price trends.

Sudbury operations had a 0.48 Lost Time Injury Frequency Rate in 2008, compared to 0.60 in 2007, and improved its year over year Total Medical Injury Frequency Rate by 12% to 8.00. As at December 31, 2008, FNX mining operations had 405 direct employees, compared to 692 as at December 31, 2007.

At the end of 2008, the Company reviewed the carrying value of its assets using current assumptions and commodity prices. As a result of this review, the carrying value of several operations and properties were reduced or written down to zero. Table 2 shows a summary of the asset impairments and the related tax adjustment, while Table 3 provides year end carrying values for principal assets. It should be noted that in October of 2005, FNX issued 20.5 million common shares to purchase from Dynatec Corporation, for approximately $400 million, a 25% interest in the PP&E of the former Sudbury Joint Venture and 50% interest in the PP&E of certain other mineral exploration properties. FNX's respective 75% and 50% interest at that time had a carrying value of approximately $125 million. This transaction increased the carrying value of the Company's PP&E to approximately $525 million and its interest in the mining and mineral properties to 100%.



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Table 2 - Summary of Non-Cash And Unusual Items Q4 2008 2008

----------------------------------------------------------------------------
$ millions $ millions
Investment in SRA write down - 10.0
Mining property impairments 373.3 373.3
Mineral exploration properties impairment 107.3 107.3
DMC equipment impairment 6.8 6.8
Intangible assets impairment - 4.1
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Sub-total impairments and write downs 487.4 501.5
Loss on mark-to-market of GLW note receivable $14.9 $14.9
Bad debt expense - 4.6
Gain on disposal of investments - (8.5)
Gain on GLW shares acquired on note receivable (2.7) (2.7)
Tax adjustments (134.6) (139.4)
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Net Total Non-Cash and Unusual Adjustments $365.0 $370.4
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Table 3 - Net Carrying Values as at December 31, 2008 Net carrying
value
----------------------------------------------------------------------------
$ millions
Levack Complex 30.0
Podolsky 15.8
Levack Footwall Deposit 362.3
Other Exploration Properties -
Corporate 1.6
DMC 25.4
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Total property, plant and equipment 435.1
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Development

Development work during 2008 occurred on all three Sudbury operations. At the McCreedy West Mine, development work supported both nickel and copper-precious metal production plans, particularly the deepening of the main access ramp to the PM Deposit below the 1900 Level. The main access ramp will continue to be deepened in 2009 to access the deeper portions of the PM Deposit.

Development work at the Levack Mine in 2008 included access to both the LFD through the 2650 Level ramp and development of the nickel deposits. The latter development work was curtailed in the second half of 2008 due to declining nickel prices. Subsequent to year end, the LFD was approved as development for commercial production by the Company's Board of Directors and the accumulated net costs will be transferred from mineral exploration properties to property under development. At the Podolsky Mine, development of the 2000 Deposit from both the 1750 and 2450 Levels continued throughout the year, while the new ramp from surface to the North Deposit was halted after the first quarter of 2008.

The actual total capex in 2008 was $167.7 million, a reduction of $69.7 million from the original capex budget of $237.4 million. The 2008 capex reductions resulted from decisions taken in response to the worsening economic conditions during 2008 in order to preserve cash. The planned capex budget for 2009 is $64.2 million, including $38.9 million for LFD development, $11.3 million to complete the initial development at the Podolsky Mine and $10.2 million primarily for production support exploration.

Exploration

FNX's 2008 exploration expenditures were $6.9 million at the LFD and Rob's Deposit, $4.6 million for contact and footwall targets at the Levack Mine, $4.0 million at the Victoria Property, $2.4 million at the McCreedy West Mine and $0.7 million on the Falconbridge Footwall Project. (During the year, 61) (surface holes were drilled for a total of) 146,578 ft and 230 underground holes were completed totaling 161,712 ft.

Exploration highlights in 2008 included disclosure of the initial indicated resource estimate from a 250 ft vertical slice of the minimum 2,500 ft long LFD. This limited portion of the LFD contained indicated resources of 754,000 tons averaging 8.1% Cu, 1.3% Ni and 7.8 g/t platinum, palladium and gold. This resource estimate was revised at the end of 2008 to contain 687,000 tons averaging 8.8% Cu, 1.4% Ni and 7.8 g/t platinum, palladium and gold, resulting in lower tons, higher grades and virtually the same amount of contained metal. A 15,027 ton bulk sample was also removed from the LFD via the 4000 Level crosscut at Xstrata Nickel's neighbouring Craig Mine. Approximately 10,683 tons from this larger bulk sample graded 8.3% Cu, 1.4% Ni and 8.8 g/t precious metals and were shipped for processing at third party facilities during 2008.

FNX significantly changed its mineral resource profile in 2009 as a result of the rapid decline in base metal prices in the third and fourth quarters and a subsequent re-evaluation of its mineral resources that were added to the FNX mineral resource inventory in 2007. Using current long term commodity prices, the Company decreased its measured and indicated resources by almost half to 20.61 million tons and its inferred resources by three quarters to 6.61 million tons.

An exploration program in the fall of 2008 at the Podolsky Property to test a Sudbury Breccia unit east of the historic Whistle Pit encountered unanticipated footwall rocks similar to the host units at the nearby 2000 Deposit. This new geologic environment will be further drill tested in the future.

The $10.2 million 2009 exploration program is focused on detailed drilling of Rob's and LFD ($5.4 million) and a surface drilling program to follow-up on the new footwall environment discovered in 2008 on the Podolsky Mine property ($2.4 million).

DMC Mining Services

DMC Mining Services generated revenues of $133.1 million in 2008, a cash operating income of $4.1 million and a net loss of $18.1 million. With the severe downturn in metal prices in 2008, DMC wrote off $4.2 million from a client bankruptcy and several mining contracts were ended, cancelled or delayed. In September of 2008, FNX wrote off the last $4.1 million amortization of intangibles assets from the 2007 purchase of DMC. During the year, DMC spent $10.0 million on capital expenditures, mainly on underground trackless equipment for new projects. Depreciation was $8.7 million, resulting in a net operating cash flow of $6.1 million.

DMC completed 2008 with an improved Lost Time injury Frequency Rate of 0.39 and a Total Medical Injury Frequency Rate of 2.32, compared to 0.69 and 4.91 respectively for 2007.

As a result of contract completions at the end of 2008 and the anticipated reduction in mining contracts for 2009, DMC reduced its employee levels during 2008 from 1,049 to approximately 270 employees at the beginning of 2009. The challenge in 2009 for DMC will be to use its excellent safety record and contracting expertise to secure new mining contracts in the US and Canada to ensure at least a breakeven cash flow performance.

Investments

The Company's portfolio of shares had a mark-to-market value of $145.8 million on December 31, 2008, including $50 million in Gold Wheaton common shares due in mid-2010 from Gold Wheaton. The portfolio's predominate holding is 360 million common shares of Gold Wheaton Gold, which had a market value of $91.8 million as at December 31, 2008. FNX accounts for its investment in Gold Wheaton using the equity method and, therefore, is required to include in earnings FNX's 38% share of Gold Wheaton's earnings or loss for the period and the Company's investment therein is adjusted by an equivalent amount. For the quarter and year ended December 31, 2008, FNX's 38% share of the loss of its equity investee, Gold Wheaton, was $0.6 million and $1.6 million, respectively. Subsequent to year end, Gold Wheaton issued 460 million common shares. FNX did not participate in this equity issuance and FNX's ownership interest in Gold Wheaton declined to 26% and would lead to an equity dilution loss of approximately $23 million in the first quarter of 2009.

Excluding the Gold Wheaton shares, the remaining investments were measured at a fair value of $4.0 million resulting in a revaluation loss of $17.3 million, net of tax, recognized in Accumulated Other Comprehensive Income.

Share Capital

There were 84,876,776 common shares outstanding as at March 27, 2009 and 2,022,667 stock options. In addition, there were 54,650 deferred share units in effect for a total fully diluted share count of 86,954,093.

Forward-Looking Statement

Certain information included in this press release, including information relating to future financial or operating performance and other statements that express management's expectations or estimates of future performance constitute "forward-looking statements." Such forward-looking statements include, without limitation, (i) estimates of future capital expenditures; (ii) estimates regarding timing of future development and production; and (iii) estimates of future costs towards profitable commercial operations. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, interpretation and implications of drilling and geophysical results; estimates regarding timing of future capital expenditures and costs towards profitable commercial operations. Other factors that could cause actual results, developments or events to differ materially from those anticipated include, among others, increases/decreases in production; volatility in metals prices and demand; currency fluctuations; cash operating margins; cash operating cost per pound sold; costs per ton of ore; variances in ore grade or recovery rates from those assumed in mining plans; reserves and/or resources; the ability to successfully integrate acquired assets; operational risks inherent in mining or development activities, and legislative factors relating to prices, taxes, royalties, land use, title and permits, importing and exporting of minerals and environmental protection. Accordingly, undue reliance should not be placed on forward-looking statements. These forward-looking statements are made as at the date hereof and the Company does not undertake any obligation to update publicly or revise any such forward-looking statements or any forward-looking statements contained in any other documents whether as a result of new information, future events or otherwise, except as may be required under applicable securities law. For a more detailed discussion of such risks and other factors, see the Company's latest filings with Canadian securities regulators.

CONFERENCE CALL

FNX will be hosting a Fourth Quarter and Full Year 2008 Conference Call on March 30, 2009 at 10:00am EST.



CONFERENCE CALL numbers are:

Live in North America:
Toll-Free Access: 1-866-223-7781 or 416-641-6136
Ask for the FNX Mining Conference Call

Replay Access information:
Toll-Free Access: 1-800-408-3053 or 416-695-5800
Passcode: 3283162#
Available until April 13, 2009 at Midnight EST


Slides for the conference call may be accessed on the Company's website www.fnxmining.com.

Note: The unaudited balance sheet, statement of operations and statement of cash flow are appended to this news release



Consolidated Balance Sheets
As at December 31
(in thousands of Canadian dollars) (Unaudited) 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $
Assets
Current
Cash and cash equivalents 129,561 35,160
Accounts receivable 59,324 103,257
Inventory 2,307 4,060
Prepaid and other 1,504 1,142
----------------------------------------------------------------------------
192,696 143,619
Investments 4,009 35,603
Investment in Gold Wheaton 215,620 -
Property, plant and equipment 435,114 815,376
Intangible assets - 6,605
Reclamation deposits 6,485 6,485
----------------------------------------------------------------------------
853,924 1,007,688
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Liabilities

Current
Accounts payable and accrued liabilities 36,136 72,405
Deferred revenue 26,433 975
----------------------------------------------------------------------------
62,569 73,380
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Long-term deferred revenue 368,969 -
Mine closure and site restoration 5,393 5,087
Future income and resource taxes 60,499 178,180
----------------------------------------------------------------------------
434,861 183,267
----------------------------------------------------------------------------
497,430 256,647
----------------------------------------------------------------------------
Shareholders' equity
Share capital 571,750 567,700
Contributed surplus - stock-based compensation 13,741 9,816
Retained earnings (deficit) (220,580) 167,960
Accumulated other comprehensive income (loss) (8,417) 5,565
----------------------------------------------------------------------------
356,494 751,041
----------------------------------------------------------------------------
853,924 1,007,688
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Segmented Balance Sheets
As at December 31, 2008
(in thousands of Canadian dollars) (Unaudited) Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Assets $ $ $
Cash and cash equivalents 120,131 9,430 129,561
Accounts receivable 44,459 14,865 59,324
Other current assets 2,823 988 3,811
----------------------------------------------------------------------------
167,413 25,283 192,696
Investments 4,009 - 4,009
Investment in Gold Wheaton 215,620 - 215,620
Property, plant and equipment 409,718 25,396 435,114
Reclamation deposits 6,485 - 6,485
----------------------------------------------------------------------------
803,245 50,679 853,924
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
Accounts payable and accrued liabilities 28,469 7,667 36,136
Deferred revenue 25,456 977 26,433
----------------------------------------------------------------------------
53,925 8,644 62,569
----------------------------------------------------------------------------
Long-term deferred revenue 368,969 - 368,969
Mine closure and site restoration 5,393 - 5,393
Future income and resource taxes 59,374 1,125 60,499
----------------------------------------------------------------------------
433,736 1,125 434,861
----------------------------------------------------------------------------
487,661 9,769 497,430
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Segmented Balance Sheets
As at December 31, 2007
(in thousands of Canadian dollars) (Unaudited) Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Assets $ $ $
Cash and cash equivalents 24,247 10,913 35,160
Accounts receivable 63,148 40,109 103,257
Other current assets 4,366 836 5,202
----------------------------------------------------------------------------
91,761 51,858 143,619
Investments 35,603 - 35,603
Property, plant and equipment 785,054 30,322 815,376
Intangible assets and reclamation deposits 6,485 6,605 13,090
----------------------------------------------------------------------------
918,903 88,785 1,007,688
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
Accounts payable and accrued liabilities 48,402 24,003 72,405
Deferred revenue - 975 975
----------------------------------------------------------------------------
48,402 24,978 73,380
----------------------------------------------------------------------------
Mine closure and site restoration 5,087 - 5,087
Future income and resource taxes 175,807 2,373 178,180
----------------------------------------------------------------------------
180,894 2,373 183,267
----------------------------------------------------------------------------
229,296 27,351 256,647
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Statements of Operations
(in thousands of Canadian dollars Three months ended Year ended
except earnings per share) December 31 December 31
(Unaudited) 2008 2007 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $ $

Operating revenues 48,723 105,616 378,062 322,043
----------------------------------------------------------------------------

Operating expenses
Expenses, excluding depreciation and
amortization 77,752 75,207 329,601 150,081
Depreciation and amortization 14,202 10,387 56,151 28,297
----------------------------------------------------------------------------
91,954 85,594 385,752 178,378
----------------------------------------------------------------------------
(43,231) 20,022 (7,690) 143,665
----------------------------------------------------------------------------

Expenses
Administration 2,436 2,826 14,348 9,254
Capital taxes - 403 (1,803) 1,719
Depreciation 229 144 853 489
Stock-based compensation 637 1,072 4,056 3,427
Asset impairments 487,362 - 501,490 1,077
Other expenses (income) (74) 2,380 (10,814) (4,524)
----------------------------------------------------------------------------
490,590 6,825 508,130 11,442
----------------------------------------------------------------------------
Earnings (loss) before taxes and other
items (533,821) 13,197 (515,820) 132,223
Income and resource taxes recovery
(expense) 137,010 19,083 128,880 (22,276)
Loss of equity investee (591) - (1,600) -
----------------------------------------------------------------------------
Net earnings (loss) for the period (397,402) 32,280 (388,540) 109,947
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Basic earnings (loss) per share (4.68) 0.38 (4.59) 1.31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Diluted earnings (loss) per share (4.68) 0.38 (4.59) 1.30
----------------------------------------------------------------------------
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Consolidated Segmented Statements of Operations
(in thousands of Canadian dollars)
(Unaudited)
Three months ended December 31, 2008 Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $

Operating revenues 27,265 21,458 48,723
----------------------------------------------------------------------------

Operating expenses
Expenses, excluding depreciation and
amortization 55,983 21,769 77,752
Depreciation and amortization 12,496 1,706 14,202
----------------------------------------------------------------------------
68,479 23,475 91,954
----------------------------------------------------------------------------
(41,214) (2,017) (43,231)
----------------------------------------------------------------------------
Expenses
Administration 2,436 - 2,436
Capital taxes - - -
Depreciation 229 - 229
Stock-based compensation 405 232 637
Asset impairments 480,574 6,788 487,362
Other expenses (income) 61 (135) (74)
----------------------------------------------------------------------------
483,705 6,885 490,590
----------------------------------------------------------------------------
Earnings (loss) before taxes and other items (524,919) (8,902) (533,821)
Income and resource taxes recovery 134,146 2,864 137,010
Loss of equity investee (591) - (591)
----------------------------------------------------------------------------
Net earnings (loss) for the period (391,364) (6,038) (397,402)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Year ended December 31, 2008 Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $

Operating revenues 244,958 133,104 378,062
----------------------------------------------------------------------------

Operating expenses
Expenses, excluding depreciation and
amortization 200,570 129,031 329,601
Depreciation and amortization 47,472 8,679 56,151
----------------------------------------------------------------------------
248,042 137,710 385,752
----------------------------------------------------------------------------
(3,084) (4,606) (7,690)
----------------------------------------------------------------------------
Expenses
Administration 14,348 - 14,348
Capital taxes (1,803) - (1,803)
Depreciation 853 - 853
Stock-based compensation 2,206 1,850 4,056
Asset impairments 490,574 10,916 501,490
Other expenses (income) (14,332) 3,518 (10,814)
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491,846 16,284 508,130
----------------------------------------------------------------------------
Earnings (loss) before taxes and other items (494,930) (20,890) (515,820)
Income and resource taxes recovery 126,100 2,780 128,880
Loss of equity investee (1,600) - (1,600)
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Net earnings (loss) for the period (370,430) (18,110) (388,540)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Statements of Cash
Flow Three months ended Year ended
(in thousands of Canadian dollars) December 31 December 31
(Unaudited) 2008 2007 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $ $

Operating activities
Net earnings (loss) for the period (397,402) 32,280 (388,540) 109,947
Non-cash items
Depreciation and amortization 14,431 10,531 57,004 28,786
Stock option expense 1,742 1,072 5,161 3,427
Future income and resource taxes
expense (recovery) (125,485) (13,961) (114,926) 9,861
Gain on disposal of shares - - (8,461) (15,480)
Asset impairments 487,362 - 501,490 1,077
Decrease in value of investments
held-for-trading (17) - 746 260
Share of loss of equity investee 591 - 1,600 -
Mark-to-market of Gold Wheaton
note receivable 14,846 - 14,846
Gain on Gold Wheaton common shares
acquired (2,700) - (2,700)
Other (5,343) 3,001 (635) 123
----------------------------------------------------------------------------
(11,975) 32,923 65,585 138,001
Net change in non-cash working
capital 19,941 17,954 11,581 29,241
----------------------------------------------------------------------------
7,966 50,877 77,166 167,242
----------------------------------------------------------------------------

Financing activities
Common shares issued - 5,678 2,814 9,727
Bank line of credit advances - - 45,837 -
Bank line of credit payments - - (45,837) -
----------------------------------------------------------------------------
- 5,678 2,814 9,727
----------------------------------------------------------------------------

Investing activities
Investments - - (10,000) (2,821)
Property, plant and equipment (28,126) (60,348) (167,751) (210,037)
Proceeds from disposal of
investments - - 21,441 25,512
Investment in DMC - (59,142) - (59,476)
Proceeds on sale of gold
equivalent units - - 175,000 -
Gold Wheaton transaction costs - - (4,366) -
Reclamation term deposits - (2,786) - (2,786)
Deferred payment obligation - (7,500) - (7,500)
----------------------------------------------------------------------------
(28,126) (129,776) 14,324 (257,108)
----------------------------------------------------------------------------
Effect of exchange rate changes on
cash (1,348) 182 97 182
----------------------------------------------------------------------------
Change in cash and cash equivalents
for the period (21,508) (73,039) 94,401 (79,957)
Cash and cash equivalents -
beginning of period 151,069 108,199 35,160 115,117
----------------------------------------------------------------------------
Cash and cash equivalents - end of
period 129,561 35,160 129,561 35,160
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Segmented Statements of Cash Flow
(in thousands of Canadian dollars)
(Unaudited)
Three months ended December 31, 2008 Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $
Operating activities
Net earnings (loss) for the period (391,364) (6,038) (397,402)
Non-cash items
Depreciation and amortization 12,725 1,706 14,431
Asset impairments 480,574 6,788 487,362
Future and resource income taxes (123,694) (1,791) (125,485)
Other 13,129 (4,010) 9,119
----------------------------------------------------------------------------
(8,630) (3,345) (11,975)
Net change in non-cash working capital 8,908 11,033 19,941
----------------------------------------------------------------------------
278 7,688 7,966
Financing activities
Common shares issued and other - - -
Investing activities
Property, plant and equipment (25,516) (2,610) (28,126)
Other - - -
Effect of exchange rate changes on cash - (1,348) (1,348)
----------------------------------------------------------------------------
Change in cash and cash equivalents for the
period (25,238) 3,730 (21,508)
Cash and cash equivalents - beginning of
period 145,369 5,700 151,069
----------------------------------------------------------------------------
Cash and cash equivalents - end of period 120,131 9,430 129,561
----------------------------------------------------------------------------
----------------------------------------------------------------------------


For the Year ended December 31, 2008 Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $
Operating activities
Net earnings (loss) for the period (370,430) (18,110) (388,540)
Non-cash items
Depreciation and amortization 48,325 8,679 57,004
Asset impairments 490,574 10,916 501,490
Future and resource income taxes (113,135) (1,791) (114,926)
Other 8,804 1,753 10,557
----------------------------------------------------------------------------
64,138 1,447 65,585
Net change in non-cash working capital 4,561 7,020 11,581
----------------------------------------------------------------------------
68,699 8,467 77,166
Financing activities
Common shares issued and other 2,814 - 2,814
Investing activities
Property, plant and equipment (157,704) (10,047) (167,751)
Other 182,075 - 182,075
Effect of exchange rate changes on cash - 97 97
----------------------------------------------------------------------------
Change in cash and cash equivalents for the
period 95,884 (1,483) 94,401
Cash and cash equivalents - beginning of
period 24,247 10,913 35,160
----------------------------------------------------------------------------
Cash and cash equivalents - end of period 120,131 9,430 129,561
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Statements of Retained Earnings (Deficit)
(in thousands of Canadian dollars)
(Unaudited) Three months Year
ended ended
December 31 December 31
2008 2007 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $ $

Retained earnings - beginning of period 176,822 135,680 167,960 58,013
Net earnings (loss) for the period (397,402) 32,280 (388,540) 109,947
----------------------------------------------------------------------------
Retained earnings - end of period (220,580) 167,960 (220,580) 167,960
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Statements of Comprehensive Income (Loss)
(in thousands of Canadian dollars)
(Unaudited) Three months Year
ended ended
December 31 December 31
2008 2007 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $ $

Net earnings (loss) for the period 397,402 32,280 (388,540) 109,947
Other comprehensive income, net of tax
Unrealized gains (loss) on available for
sale investments (1,657) 2,593 (17,337) 1,391
Cumulative translation adjustment (1,019) 371 2,093 371
----------------------------------------------------------------------------
Comprehensive income (loss) for the period 394,726 35,244 (403,784) 111,709
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Contact Information

  • FNX Mining Company Inc.
    Terry MacGibbon
    Chairman and Chief Executive Officer
    (416) 628-5929
    or
    FNX Mining Company Inc.
    Ronald P. Gagel
    Senior Vice President and Chief Financial Officer
    (416) 628-5929
    or
    FNX Mining Company Inc.
    David Constable
    Vice President Investors Relations
    (416) 628-5929
    Email: info@fnxmining.com
    Website: www.fnxmining.com