FNX Mining Company Inc.

FNX Mining Company Inc.

December 23, 2009 07:00 ET

FNX Mining Company Inc.: 2010 Production and Capex Guidance

TORONTO, ONTARIO--(Marketwire - Dec. 23, 2009) - FNX Mining Company Inc. (TSX:FNX) ("FNX" or "the Company") announces production and capital expenditures guidance for 2010.

During 2009, FNX produced copper-nickel-platinum-palladium-gold from its copper-precious metal dominant ore deposits at the McCreedy West and Podolsky mines but continued its suspension of production from its nickel dominant ore deposits. The Company's 2009 operations were impacted by the shutdown of FNX's primary custom processor; however, the Company has continued to produce during the ongoing shutdown and expects to meet its original 2009 production guidance.

In 2010, FNX will continue to focus its mining activities on its copper-precious metal dominant deposits, including achieving commercial production at the LFD by mid-year. The 2010 forecast does not include any production from its primary nickel dominant deposits, although that opportunity remains under active consideration and will be assessed on a quarterly basis.

Production in 2010 is expected to total 891,000 tons of ore shipped, a 31% increase over the 2009 production plan. The total payable metal forecast for 2010 consists of 48.1 million lbs of copper, 7.7 million lbs of nickel and 74,500 oz of combined platinum, palladium and gold.

Table 1: 2010 Annual Production Forecast1

  Podolsky LFD2 McCreedy Total
Tons 417,000 200,000 274,000 891,000
Payable Metal        
  Copper (Mlbs) 27.1 16.6 4.4 48.1
  Nickel (Mlbs) 1.7 5.2 0.8 7.7
  Pt+Pd+Au (ozs) 35,000 8,700 30,800 74,500

1 Assumed commodity prices: nickel = US$7.50 per pound, copper = US$2.75 per pound,
platinum = US$1,300 per ounce, palladium = US$300 per ounce and gold = US$1,000 per ounce.
2 Includes 54,000 tons of LFD pre-production ore producing 5.3 million lbs Cu, 1.3 million lbs Ni and 1,950 oz Pt+Pd+Au

The Company recently completed the remaining internal ramp development at the Podolsky Mine, which improved logistics and will allow a 13% increase in production to 417,000 tons of copper-precious metal dominant ore in 2010.

The Company's ongoing development of the high grade LFD remains slightly ahead of schedule with commercial production from the upper portions of the LFD expected to commence by mid-2010. The LFD is expected to produce a total of 200,000 tons of ore consisting of 146,000 tons of commercial ore and 54,000 tons of pre-production and development ore. The commercial ore will consist of 48,900 tons mined throughout the year from the former Rob's Zone at the top of the LFD and 97,400 tons of initial commercial production below the Rob's Zone. The 54,000 tons of pre-production development ore will be shipped from the LFD in the first half of 2010 and is expected to contain payable metals totaling 5.3 million pounds of copper, 1.3 million pounds of nickel and 1,950 total ounces of platinum, palladium and gold. Pre-production revenues from this production will be credited against capital development costs and neither the tons shipped nor the payable metals will be included in the Company's operations statements.

The tenor of the ore and the expected mine grades of the LFD mineralization increase with depth from previously published probable reserve grades in the transitional Rob's Zone at the top of the LFD of 1.3% Cu, 1.9% Ni and 1.2 g/t total precious metals ("TPM") to the previously published indicated resource grades at the 4000 Level in the middle portion of the LFD of 8.8% Cu, 1.4% Ni and 7.8 g/t TPM. The mining grades from the bottom of the low grade Rob's Zone to the high grade 4000 Level of the deposit are expected to increase with depth and have a drill indicated range of 5.0% to 6.0% Cu, 1.2% to 1.5% Ni and 2.0 to 4.0 g/t TPM. As the ongoing development allows greater access and production from the middle portions of the deposit, the expected mine grade will increase accordingly.

FNX has historically provided its cost and revenue guidance and results in the form of minesite cash operating margins per ton of ore shipped per mine site (i.e. mine site cash operating revenue per ton minus mine site cash operating cost per ton leaving mine site cash operating margin per ton per mine site). With the growing increase in production from higher grade copper and precious metal dominant deposits, including the future LFD production, the revenues, costs and margins per ton of ore shipped will vary widely from deposit to deposit and from mine site to mine site and such guidance is no longer considered useful for evaluating performance and quarterly production comparisons. Therefore, starting in 2010 and going forward, cost guidance will be stated as the minesite cash operating cost, net of by-product credits, of producing a pound of copper from the copper-precious metal dominant deposits When production from the primary nickel dominant deposits is reactivated and becomes material, consideration will be given to providing financial guidance and results for those operations in terms of cost to produce a pound of nickel, net of by-product credits.

As the majority of the 2010 production is expected to come from the copper-precious metal dominant deposits, the Company's financial guidance, at this time, will only be stated in terms of cost to produce a pound of copper, net of by-products credits. The Company's 2010 anticipated minesite cash operating cost to produce a pound of copper, net of by-product credits is forecast at US$0.60/lb. The sale of 50% of the contained TPM ounces, totaling about 60,500 ounces of platinum+palladium+gold, has not been considered in the calculation of mine site cash operating cost per pound of copper.

Table 2: 2010 Capital Budget ($Million)

  Operations Mines Exploration Exploration
Levack Complex 8.4 9.0 -
Podolsky 14.3 4.3 1.7
LFD(1) 49.1 - 2.7
Victoria - - 7.2
Nickel Lake - - 2.2
Falconbridge Footwall - - 1.2
Other Properties - - 0.7
Corporate and Other 3.4 - -
Total 75.2 13.3  15.7

(1) Excludes LFD pre-production costs and credits

Capital expenditures for 2010 (shown in Table 2) are forecast to total $75.2 million for operations, $13.3 million for mines' exploration and $15.7 million for greenfield exploration. Capital expenditures for operations include $49.1 million for LFD to complete the initial development of the upper portion of the LFD and to continue the ramp below the 4000 Level to allow access to the deposit at depth. Sustaining capital, totaling $14.3 million for Podolsky and $8.4 million for the Levack Complex, is slightly higher than normal because of cost cutting over the past two years. Also, due to cash conservation and cost cutting, mines' exploration expenditures were dramatically reduced over the past two years and have been increased to $13.3 million in 2010 to facilitate near and mid-term mine planning and development and to increase the reserves and resources around the existing ore deposits. A total of $15.7 million will be spent exploring for new deposits and discoveries on the Company's Sudbury properties with approximately $9.5 million of that budget consisting of the unspent flow-through funds raised in the spring of 2009.

The Company expects its DMC Mining Services division to breakeven during 2010.

As at September 30, 2009, the Company's liquid assets totaled $409.3 million and consisted of $258.2 million in cash, $151.1 million in investments and no debt. The Company's strong balance sheet is sufficient to implement the 2010 operating plan and provide additional resources to seek new opportunities in Sudbury or elsewhere.

Forward-Looking Statement

This news release contains certain forward-looking statements. These forward-looking statements are subject to a variety of risks and uncertainties beyond the Company's ability to control or predict, which could cause actual events or results to differ materially from those anticipated in such forward-looking statements. In this news release, statements about ore and metal production forecasts, capital budget projections, possible future cash balances and future operating costs are examples of forward-looking statements. There is no guarantee that the production or cost forecasts will be accurate or that deposits will be viable. Forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to publicly update any such statement or reflect new information or the occurrence of future events or circumstances, except where required by securities regulations. Accordingly, readers should not place undue reliance on forward-looking statements.

Contact Information

  • FNX Mining Company Inc.
    Terry MacGibbon
    Chairman and Chief Executive Officer
    FNX Mining Company Inc.
    David Constable
    Vice President Investor Relations