FNX Mining Company Inc.
TSX : FNX

FNX Mining Company Inc.

August 07, 2008 06:30 ET

FNX Reports Second Quarter 2008 Results

TORONTO, ONTARIO--(Marketwire - Aug. 7, 2008) - FNX Mining Company Inc. (TSX:FNX) ("FNX" or the "Company") reports operational and financial results for the quarter ending June 30, 2008 for its Sudbury operations and Mining Services Business ("MSB"). Net earning for the second quarter were $11.3 million ($0.13 per share) on revenues of $112.2 million, compared to net earnings of $35.0 million ($0.42 per share) on revenues of $79.2 million for the second quarter of 2007. Net earnings for the first six months of 2008 were $35.4 million ($0.42 per share) on revenues of $252.9 million, compared to net earnings of $65.2 million ($0.78 per share) generated from revenues of $159.7 million for the first six months of 2007, the latter driven by sharply higher nickel prices. Table 1 summarizes the Q2-2008 key operating and financial measures.



----------------------------------------------------------------------------
Table 1 - Unaudited Financial Three Months Ended Six Months Ended
and Operating Highlights June 30 June 30
2008 2007 2008 2007
----------------------------------------------------------------------------
Consolidated
------------
Revenue ($000) 112,200 79,187 252,916 159,660
Net Earnings ($000) 11,341 34,991 35,404 65,182
Basic Earnings per Share ($) 0.13 0.42 0.42 0.78
Fully Diluted Earnings per
Share ($) 0.13 0.41 0.42 0.76
Cash Flow from Operations ($000) 13,531 52,353 69,327 88,779
Cash Flow per Share ($) 0.16 0.62 0.82 1.06
EBITDA ($000) 29,626 57,836 77,963 111,596

Mining Operations
-----------------
Total Revenue ($000) 75,192 79,187 166,515 159,660
Cash Operating Costs ($000) 51,066 24,304 96,298 48,859
Cash Operating Margin ($000) 24,126 54,883 70,217 110,801

Revenue per Ton Sold ($) 213 339 261 363
Cash Operating Costs per Ton
Sold ($) 145 104 151 111
Cash Operating Margin per Ton
Sold ($) 68 235 110 252

Cash Cost per lb of Ni net of
by-product credits (US$) 2.38 2.58 1.84 2.99

Net Earnings (Loss) ($000) 12,889 34,991 37,908 65,182
Cash Flow from Operating
Activities ($000) 10,914 52,353 66,067 88,779
EBITDA ($000) 27,796 57,836 73,454 111,596

Total Ore Sold (tons) 352,765 233,689 637,664 439,543
Nickel Ore Sold (tons) 220,579 159,195 419,633 292,825
Grade of Nickel Ore Sold (%Ni) 1.1 1.3 1.2 1.3
Payable Metal Sold - Nickel
(000 lbs) 3,491 3,104 6,983 5,732
Average Ni Price Received
(US$/lb) 9.21 18.54 11.82 19.96
Copper Ore Sold (tons) 132,186 74,494 218,031 146,718
Grade of Copper Ore Sold (%Cu) 2.9 1.5 3.4 1.4
Payable Metal Sold - Copper
(000 lbs) 7,262 2,426 14,154 4,688
Average Cu Price Received
(US$/lb) 3.70 3.73 3.77 3.22
Payable Metal Sold - Total
Precious Metals (ozs) 11,582 5,282 18,854 11,243
Payable Metal Sold - Cobalt
(000 lbs) 54 38 109 72

Mining Services
---------------
Total Revenue ($000) 37,008 86,401
Cash Operating Costs ($000) 35,215 82,199
Cash Operating Margin ($000) 1,793 4,202
Net Earnings (Loss) ($000) (1,548) (2,504)
Cash Flow from Operating
Activities ($000) 2,617 3,260

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(1) Cash cost per pound of nickel sold is net of by-product credits.
(2) The 2008 average copper grade and increase in copper ore tons, copper
and precious metals reflects the achievement of commercial production
from higher grade Podolsky mine effective January 1, 2008.


FNX Chairman and CEO, Terry MacGibbon noted that, "Our production results were in line with our 2008 plan, however overall financial results were lower due to a $5.8 million negative provisional pricing adjustment from the first quarter and a realized Q2-2008 nickel price of US$9.21 per pound compared to US$18.54 per pound in Q2-2007. We continue to confirm 2008 ore production, payable metals and cost per ton guidance, and expect the third and fourth quarter results to be significantly stronger as Podolsky Mine ramps up closer to its planned production rate and the increased ore cutoff at Levack Mine generates improved results. The Gold Wheaton transaction completed July 15, 2008, strengthens our balance sheet without shareholder dilution and provides potentially strong gains through our 38% ownership interest in Gold Wheaton."

The transaction between FNX and Gold Wheaton Gold Corp ("Gold Wheaton") to sell 50% of the contained precious metals from the Company's Sudbury operations closed July 15, 2008. FNX received $175 million in cash and 350 million common shares of Gold Wheaton, an additional $50 million in cash, shares or warrants six months after closing and US$400 per ounce of gold equivalent in shipped ore. The 350 million common shares of Gold Wheaton held by FNX represent approximately a 38% ownership and has an approximate mark to market value of $521.5 million on August 1, 2008.

The average cash operating revenues per ton sold during this quarter and year to date ("YTD") were $213 and $261, respectively, while the average cash operating costs per ton sold were $145 and $151 respectively leaving an average cash operating margin per ton sold of $68 and $110, respectively. This compares to average cash operating revenues per ton sold for the second quarter and first half of 2007 of $339 and $363 respectively, while average cash operating costs per ton were $104 and $111 leaving an average cash operating margin per ton sold of $235 and $252 respectively. The average cash operating cost per ton sold declined to $138 in the 2008 second quarter, plus a $7 per ton one time signing bonus resulting from the new three year labor contract, from $159 in the first quarter of 2008 and is $151 per ton sold 2008 YTD. The Company is on target to achieve its $135 per ton forecast for 2008.

The 2008 second quarter cash flow from operations was $13.5 million ($0.16 per share) and EBITDA was $29.6 million, while YTD cash flow from operations and EBITDA were $69.3 million ($0.82 per share) and $78.0 million, respectively. This compares to cash flow from operations and EBITDA for the second quarter and the first six months 2007 of $52.4 million ($0.62 per share), $57.8 million, $88.8 million ($1.06 per share) and $111.6 million, respectively.

As at June 30, 2008 and not including $175 million cash and securities received in the Gold Wheaton transaction, the cash position and the current value of the investment portfolio were $39.5 million, and $15.1 million respectively, compared to $35.2 million and $35.6 million respectively at the end of December 2007. Working capital at the end of the second quarter was $51.9 million, a decrease of $2.3 million from the end of the first quarter 2008. On June 23, 2008, the Company disposed of 11.8 million shares of Lake Shore Gold Corp ("Lake Shore") at a price of $1.82 per share for net proceeds of $21.4 million. A gain in the amount of $8.5 million has been recognized during this quarter on the disposition of Lake Shore shares. The Company had a balance of $20.4 million (US$20 million) outstanding at the end of the second quarter from its US$100 million line of credit facility.

Capital expenditures during the quarter and YTD totaled $45.7 million and $98.4 million respectively, compared to $49.6 million and $94.2 million respectively in 2007. The original capital budget for 2008 was $237.4 million, including $20.7 million for exploration. After a mid-year review of priorities and capital re-allocation, the 2008 capital budget was reduced by $50.8 million to $186.6 million. The main decreases are $30.6 million at the Levack Mine as a result of current changes in the mining plan, $11.6 million from the postponement of the Nickel Ramp decline and $8.1 million at Podolsky Mine moved into 2009 activities. The revised 2008 exploration budget saw $2.0 million moved from Levack to the Levack footwall Deposit ("LFD") and $0.5 million moved from McCreedy West to Podolsky. Net change in cash balances as a result of operating, financing and investing activities since December 31, 2007 was a net inflow of $10.3 million in the 2008 second quarter and a net inflow of $4.3 million YTD, compared to a net inflow of $1.8 million and a net outflow of $5.3 million for the same periods in 2007.

Operations

Sudbury mining operations set a new record for total tonnage of ore shipped during the 2008 second quarter of 353,000 tons, an increase of 24% and 51% over the first quarter of 2008 and the second quarter of 2007, respectively. Ore shipped during the quarter consisted of 221,000 tons of nickel ore sold, compared to 159,000 tons sold in the comparable period of 2007, and 132,000 tons of copper ore sold this quarter, compared to 74,000 tons in the same period last year. YTD the Company shipped 638,000 tons, compared to 440,000 tons in the first half of 2007, a 45% increase year-over-year.

Quarterly metal sales totaled 3.5 million pounds of nickel, 7.3 million pounds of copper and 11,582 ounces of platinum, palladium and gold ("TPM"), compared to 3.1 million pounds, 2.4 million pounds and 5,282 ounces respectively in Q2-2007. YTD production of nickel, copper and TPM's was 7.0 million pounds, 14.2 million pounds and 18,854 ounces respectively, compared to 5.7 million pounds, 4.7 million pounds and 11,243 ounces respectively in the comparable period of 2007. The production ramp up at the Podolsky Mine contributed higher copper and TPM output during the second quarter and YTD. A total of 4,500 tons of transitional ore from Rob's Deposit was also shipped during the Q2-2008. This represents our initial production from Rob's Deposit and, in line with our 2008 guidelines, Rob's Deposit will be a regular contributor for the balance of 2008 and into 2009. Table 2 and 3 summarize operating results from the second quarter and YTD 2008 and 2007 for the Levack Complex and Podolsky Mine, respectively.



----------------------------------------------------------------------------
Table 2 - Production Three months ended Six months ended
and Sales Summary June 30 June 30
Levack Complex 2008 2007 2008 2007
----------------------------------------------------------------------------
Ore sold (tons)
Nickel ore 220,579 159,195 419,633 292,825
Copper ore 77,291 74,494 139,024 146,718
----------------------------------------------------------------------------
Total ore sold 297,870 233,689 558,657 439,543
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Grade of ore sold
Nickel ore (%Ni) 1.1 1.3 1.2 1.3
Copper ore (%Cu) 1.2 1.5 1.2 1.4

Payable metal sold
Nickel (000s lbs) 3,114 3,104 6,265 5,732
Copper (000s lbs) 2,417 2,426 4,674 4,688
TPM (ozs) 6,233 5,282 10,779 11,243

Cobalt (000s lbs) 50.9 38.3 103.8 72.0

Metal sales and costs
Revenue ($/ton of ore sold) 157 339 201 363
Cash cost ($/ton of ore sold) 132 104 136 111
Cash operating margin ($/ton
of ore sold) 25 235 65 252
----------------------------------------------------------------------------



----------------------------------------------------------------------------
Table 3 - Production Three months ended Six months ended
and Sales Summary June 30 June 30
Podolsky Mine 2008 2007 2008 2007
----------------------------------------------------------------------------
Ore sold (tons)
Copper ore 54,895 - 79,007 -
----------------------------------------------------------------------------
Grade of ore sold
Copper ore (%Cu) 5.4 - 7.3 -

Payable metal sold
Nickel (000s lbs) 377 - 718 -
Copper (000s lbs) 4,845 - 9,480 -
TPM (ozs) 5,349 - 8,075 -
Cobalt (000s lbs) 3.1 - 4.8 -

Metal sales and costs
Revenue ($/ton of ore sold) 519 - 687 -
Cash cost ($/ton of ore sold) 212 - 257 -

Cash operating margin ($/ton
of ore sold) 307 - 430 -
----------------------------------------------------------------------------


The average metal prices per pound received during the second quarter for nickel and copper were US$9.21 and US$3.70 respectively, compared to US$18.54 and US$3.73 respectively in Q2-2007. YTD 2008, the average realized Ni and Cu prices were US$11.82 and US$3.77 respectively, compared to US$19.96 and US$3.22 respectively during the comparable period in 2007. TPM prices remained strong during this quarter. The cost to produce a pound of nickel, net of by-product credits during the quarter, was US$2.38, compared to US$2.58 for the same period in 2007.

Q2-2008 capital expenditures of $45.7 million were focused on mine development, equipment acquisition and LFD infrastructure. Work on the LFD is being optimized to ensure rapid access to this high grade ore. Given this focus, Levack utilized $15 million, Podolsky $15 million and McCreedy West $5 million in capital during 2008 second quarter.

Safety results for FNX Sudbury operations in the second quarter included total medical injury frequency rate ("TMIFR") of 9.1 and the Company incurred three lost time accidents during the quarter, compared to zero in Q1-2008. This compares a TMIFR of 8.4 in Q2-2007. The Mining Services Business ("MSB") incurred two time lost accidents and had a TMIFR of 0.9 during the second quarter compared to 2.7 during Q2-2007.

Development

Development work on the upper LFD continued during the second quarter with the LFD access ramp advancing from the Levack Mine 2650 Level past the third sub-level of Rob's Deposit. Sub-levels are being driven into Rob's Deposit at 50 ft vertical intervals. To date, two of the sub-levels are completely developed, while the third sub-level is currently being completed. A ventilation raise was completed, which enhanced airflow to support development and ultimately production. A secondary egress from the 2950 Level to the 2650 Level was also finished. Installation of new transformers to advance electrical power in the access decline is planned for Q3-2008. Rehabilitation of the Levack #2 shaft below the 2650 Level also continued through this quarter and will ultimately provide access to the 3600 Level where a new ramp will allow access to a deeper horizon of the LFD. Approximately 11,000 tons out of the 15,000 ton LFD bulk sample taken from the Craig Mine 4000 Level earlier this year was shipped to the Clarabelle Mill in early July. Net proceeds from this sample will be a pre-production credit to the carrying value of the LFD. The balance of the bulk sample is being stored for additional metallurgical test work as necessary.

Mining in Rob's Deposit commenced during Q2 with the shipment of 4,500 tons with an average grade of 1.70% Ni and 1.20% Cu. Rob's Deposit is strengthening with depth and mining is expected to continue as the LFD access ramp is driven deeper and further sub-levels are developed.

Capital programs at the Levack Mine focused on the completion of ore deposit development and infrastructure completion, including finishing the access ramp from the 1800 Level to 2650 Level. At McCreedy West, ore deposit development on both contact nickel deposits and the PM Deposit continued throughout second quarter together with creation of additional diamond drill stations.

At Podolsky, the access ramps are being driven simultaneously up from the 2450 Level and down from the 1750 Level and sub-levels are being driven into the 2000 Deposit at appropriate levels for mining. Development from the 2450 Level to the 2375 Level is complete and sub-level development is underway. Approximately 50% of the access ramp to the 2300 Level is also complete. Development of the access ramp from the 1750 Level has been driven to below the 1925 Level and will continue deeper in Q3-2008. The 1925 Level development has crossed strong mineralization in the Grey Gabbro Deposit and will intersect the 2000 Deposit in Q3-2008. A large diameter ventilation raise to surface, smaller ventilation raises and rock passes were completed during the second quarter and fan installation on the large ventilation raise is scheduled for the balance of 2008.

Mining Services Business

Revenues from MSB for the three months ended June 30, 2008 totaled $37.0 million, compared to $49.4 million during the first quarter of 2008 for a total YTD revenues of $86.4 million. Contract costs for the second quarter of 2008 totaled $35.2 million, compared to $47.0 million during the first quarter of 2008. YTD contract costs totaled $82.2 million. Depreciation and amortization expenses, including amortization of intangible assets acquired upon the acquisition of MSB, totaled $2.3 million, unchanged from the first quarter of 2008.

Cash operating margin, a non-GAAP performance measure (see discussion under Non-GAAP Performance Measures below), calculated as the operating revenues of the MSB segment less operating costs of the MSB segment excluding depreciation and amortization, was $1.8 million during the second quarter 2008, compared to $2.4 million for the first quarter of 2008. MSB has generated an overall small operating loss since its acquisition in late 2007, as it incurred a net loss of $2.5 million during the first six months of 2008 and had net earnings of $1.2 million during the fourth quarter of 2007.

As at June 30, 2008, MSB had a backlog of work to be completed of approximately $152 million. As part of the normal course of business, MSB regularly sources new clients and new contracts to replace expiring contracts and management continues to pursue new opportunities on an ongoing basis.

Exploration

During the 2008 second quarter, FNX completed 98 diamond drill holes for a total of 110,129 ft and 163 surface and underground holes were drilled totaling 177,730 feet in the first half of 2008. Approximately 33% of the footage drilled to date targeted the LFD. A total of six surface and seven underground drills are currently operating on FNX's Sudbury exploration properties, while another 13 underground drills are supporting development activities and operations.

Considerable development was completed on transition Ni-Cu-TPM veins in the up-dip extents of Rob's Deposit from the Levack Mine 2650 Level access ramp during the second quarter of 2008. Approximately 200 ft of lateral continuity has been established along a trunk vein on two levels located 50 ft apart vertically. Development, production, detailed mapping and definition drilling will provide valuable insights into the geological and resource modeling required to mine Rob's Deposit and to understand the vein composition and orientation changes in the transition into the LFD. Definition drilling of the upper LFD from Rob's Deposit workings will continue through Q3-2008, in addition to definition drilling of the LFD from the 4000 Level exploration ramp from the Craig Mine.

New footwall exploration at the Podolsky Property was initiated during this quarter for the first time since 2005 on both the northwest and southeast sides of the Whistle Offset, which hosts the Podolsky 2000 Deposit. The southeast footwall program is designed to test the relationship between the "splay" in the Whistle Offset dyke adjacent to the 2000 Deposit, which extends from the Whistle Offset to the southeast, and the well developed Sudbury Breccia package identified in surface mapping. The geological interpretation is that a quartz diorite offset dyke of a similar composition as the main Whistle Offset extends perpendicular to it, sub-parallel to the Sudbury Igneous Complex basal contact.

Surface drilling at the Victoria Property focused on testing changes in quartz diorite dyke geometry, which are typically good hosts for offset-related nickel-rich sulphide mineralization. This drilling continued through Q2-2008 and will continue well into Q3-2008.

Subsequent Event

On June 12, 2008, FNX and Kadywood Capital Corp now renamed Gold Wheaton Gold Corp ("Gold Wheaton"), announced the formation of a new gold stream company. FNX and Gold Wheaton entered into a binding agreement whereby Gold Wheaton will purchase, for a consideration of cash and Gold Wheaton securities totaling $400 million, plus US$400 per ounce of gold equivalent produced, 50% of the contained gold equivalent ounces of TPM's in ore mined and shipped from FNX's:

1) McCreedy West's PM and 700 Deposits.

2) Podolsky's 2000 and North Deposits.

3) Levack's LFD, Rob's and 1900 Deposits.

The Company received $175 million in cash on the July 15, 2008 closing date as part of the $400 million consideration and holds 350 million common shares, or approximately 38% ownership interest in Gold Wheaton.

Non-GAAP Performance Measures

This press release contains certain non-GAAP measures like cash operating margin, EBITDA, etc. Please see the Company's MD&A on SEDAR for discussion of non-GAAP performance measures.

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 sold; 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 Second Quarter Conference Call on August 7, 2008 at 9:00am EST.

CONFERENCE CALL numbers are:



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

Replay Access information:
Toll-Free Access: 1-800-408-3053 or 416-695-5800
Passcode: 3267294#
Available until September 6, 2008 at Midnight


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
(in thousands of Canadian dollars) June 30 December 31
(Unaudited) 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $
Assets
Current
Cash and cash equivalents 39,472 35,160
Accounts receivable 104,533 103,257
Inventory 1,030 4,060
Prepaid and other assets 1,285 1,142
----------------------------------------------------------------------------
146,320 143,619
Investments 15,090 35,603
Property, plant and equipment 889,757 815,376
Intangible assets 4,954 6,605
Reclamation deposits 6,485 6,485
----------------------------------------------------------------------------
1,062,606 1,007,688
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Liabilities

Current
Accounts payable and accrued liabilities 73,925 72,405
Bank indebtedness 20,372 -
Deferred revenue 150 975
----------------------------------------------------------------------------
94,447 73,380
----------------------------------------------------------------------------
Mine closure and site restoration 5,240 5,087
Future income and resource taxes 186,411 178,180
----------------------------------------------------------------------------
191,651 183,267
----------------------------------------------------------------------------
286,098 256,647
----------------------------------------------------------------------------
Shareholders' equity
Share capital 569,984 567,700
Contributed surplus - stock-based compensation 11,981 9,816
Retained earnings 203,364 167,960
Accumulated other comprehensive income (8,821) 5,565
----------------------------------------------------------------------------
776,508 751,041
----------------------------------------------------------------------------
1,062,606 1,007,688
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Consolidated Segmented Balance Sheets
(in thousands of Canadian dollars)
(Unaudited) Mining Mining
As at June 30, 2008 Operations Services Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $

Assets
Cash and cash equivalents 26,274 13,198 39,472
Accounts receivable 71,202 33,331 104,533
Inventory 672 358 1,030
Prepaid and other assets 1,058 227 1,285
----------------------------------------------------------------------------
99,206 47,114 146,320
Investments 15,090 - 15,090
Property, plant and equipment 860,995 28,762 889,757
Intangible assets - 4,954 4,954
Reclamation deposits 6,485 - 6,485
----------------------------------------------------------------------------
981,776 80,830 1,062,606
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
Accounts payable and accrued
liabilities 56,839 17,086 73,925
Bank indebtedness 20,372 - 20,372
Deferred revenues - 150 150
----------------------------------------------------------------------------
77,211 17,236 94,447
----------------------------------------------------------------------------
Mine closure and site restoration 5,240 - 5,240
Future income and resource taxes 183,970 2,441 186,411
----------------------------------------------------------------------------
189,210 2,441 191,651
----------------------------------------------------------------------------
266,421 19,677 286,098
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Mining Mining
As at December 31, 2007 Operations Services Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $
Assets
Cash and cash equivalents 24,247 10,913 35,160
Accounts receivable 63,148 40,109 103,257
Inventory 3,384 676 4,060
Prepaid and other assets 982 160 1,142
----------------------------------------------------------------------------
91,761 51,858 143,619
Investments 35,603 - 35,603
Property, plant and equipment 785,054 30,322 815,376
Intangible assets - 6,605 6,605
Reclamation and other deposits 6,485 - 6,485
----------------------------------------------------------------------------
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 Six months ended
except earnings per share) June 30 June 30
(Unaudited) 2008 2007 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $ $

Operating revenues 112,200 79,187 252,916 159,660
----------------------------------------------------------------------------

Operating expenses
Expenses, excluding depreciation
and amortization 86,281 24,304 178,497 48,859
Depreciation and amortization 14,826 5,951 25,716 10,830
----------------------------------------------------------------------------
101,107 30,255 204,213 59,689
----------------------------------------------------------------------------
11,093 48,932 48,703 99,971
----------------------------------------------------------------------------

Expenses
Administration 4,341 2,177 7,016 4,470
Capital taxes (1,803) 272 (1,803) 722
Depreciation 198 110 418 207
Stock-based compensation 1,389 690 2,563 1,578
Other expenses (income) (8,017) (6,110) (10,839) (7,377)
----------------------------------------------------------------------------

(3,892) (2,861) (2,645) (400)
----------------------------------------------------------------------------

Earnings before taxes 14,985 51,793 51,348 100,371

Income and resource taxes 3,644 16,802 15,944 35,189
----------------------------------------------------------------------------
Net earnings for the period 11,341 34,991 35,404 65,182
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Basic earnings per share $0.13 $0.42 $0.42 $0.78
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Diluted earnings per share $0.13 $0.41 $0.42 $0.76
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Consolidated Segmented Statements of Operations
(in thousands of Canadian dollars)
(Unaudited) Mining Mining
Three months ended June 30, 2008 Operations Services Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $

Operating revenues 75,192 37,008 112,200
----------------------------------------------------------------------------

Operating expenses
Expenses, excluding depreciation
and amortization 51,066 35,215 86,281
Depreciation and amortization 12,520 2,306 14,826
----------------------------------------------------------------------------
63,586 37,521 101,107
----------------------------------------------------------------------------
11,606 (513) 11,093
----------------------------------------------------------------------------
Expenses
Administration 4,341 - 4,341
Capital taxes (1,803) - (1,803)
Depreciation 198 - 198
Stock-based compensation 832 557 1,389
Other expenses (income) (7,949) (68) (8,017)
----------------------------------------------------------------------------
(4,381) 489 (3,892)
----------------------------------------------------------------------------
Earnings before taxes 15,987 (1,002) 14,985
Income and resource taxes 3,098 546 3,644
----------------------------------------------------------------------------
Net earnings (loss) for the period 12,889 (1,548) 11,341
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Mining Mining
Six months ended June 30, 2008 Operations Services Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $

Operating revenues 166,515 86,401 252,916
----------------------------------------------------------------------------

Operating expenses
Expenses, excluding depreciation
and amortization 96,298 82,199 178,497
Depreciation and amortization 21,113 4,603 25,716
----------------------------------------------------------------------------
117,411 86,802 204,213
----------------------------------------------------------------------------
49,104 (401) 48,703
----------------------------------------------------------------------------
Expenses
Administration 7,016 - 7,016
Capital taxes (1,803) - (1,803)
Depreciation 418 - 418
Stock-based compensation 1,430 1,133 2,563
Other expenses (income) (10,372) (467) (10,839)
----------------------------------------------------------------------------
(3,311) 666 (2,645)
----------------------------------------------------------------------------
Earnings before taxes 52,415 (1,067) 51,348
Income and resource taxes 14,507 1,437 15,944
----------------------------------------------------------------------------
Net earnings (loss) for the period 37,908 (2,504) 35,404
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Consolidated Statements of Cash Flow Three months ended Six months ended
(in thousands of Canadian dollars) June 30 June 30
(Unaudited) 2008 2007 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $ $
Operating activities
Net earnings for the period 11,341 34,991 35,404 65,182
Non-cash items
Depreciation and amortization 15,024 6,061 26,134 11,037
Stock-based compensation 1,389 690 2,563 1,578
Future income and resource taxes 1,523 10,261 10,497 16,776
Gain on disposal of shares (8,461) (11,520) (8,461) (11,520)
Gain on disposal of fixed assets - - (94) -
Gain on sale of mineral exploration
properties - (2,354) - (2,354)
Write-down of mineral exploration
properties - 1,077 - 1,077
(Increase) decrease in value of
investments held for trading 215 (934) 253 (934)
Other 143 (108) (101) (45)
----------------------------------------------------------------------------
21,174 38,164 66,195 80,797
Net change in non-cash working
capital (7,643) 14,189 3,132 7,982
----------------------------------------------------------------------------
13,531 52,353 69,327 88,779
----------------------------------------------------------------------------

Financing activities
Common shares issued 301 1,833 641 3,022
Bank indebtedness - advance 45,837 - 45,837 -
Bank indebtedness - payment (25,465) - (25,465) -
----------------------------------------------------------------------------
20,673 1,833 21,013 3,022
----------------------------------------------------------------------------

Investing activities
Investments - (2,821) (10,000) (2,821)
Property, plant and equipment (45,741) (49,553) (98,401) (94,246)
Proceeds from disposal of
investments 21,441 - 21,441 -
----------------------------------------------------------------------------
(24,300) (52,374) (86,960) (97,067)
----------------------------------------------------------------------------
Effect of exchange rate changes
on cash 431 - 932 -
----------------------------------------------------------------------------
Change in cash and cash equivalents
for the period 10,335 1,812 4,312 (5,266)
----------------------------------------------------------------------------
Cash and cash equivalents -
beginning of period 29,137 108,039 35,160 115,117
----------------------------------------------------------------------------
Cash and cash equivalents -
end of period 39,472 109,851 39,472 109,851
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Consolidated Segmented
Statements of Cash Flow
(in thousands of Canadian dollars)
(Unaudited) Mining Mining
Three months ended June 30, 2008 Operations Services Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $
Operating activities
Net earnings (loss) for the period 12,889 (1,548) 11,341
Non-cash items
Depreciation and amortization 12,718 2,306 15,024
Future income and resource taxes 1,523 - 1,523
Other (7,271) 557 (6,714)
----------------------------------------------------------------------------
19,859 1,315 21,174
Net change in non-cash working capital (8,945) 1,302 (7,643)
----------------------------------------------------------------------------
10,914 2,617 13,531
Financing activities
Bank indebtedness 20,372 - 20,372
Common shares issued 301 - 301
Investing activities
Proceeds from disposal of investments 21,441 - 21,441
Property, plant and equipment (45,711) (30) (45,741)
Effect of exchange rate changes on cash - 431 431
----------------------------------------------------------------------------
Change in cash and cash equivalents for
the period 7,317 3,018 10,335
18,957 10,180 29,137
----------------------------------------------------------------------------
26,274 13,198 39,472
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Mining Mining
For the six months ended June 30, 2008 Operations Services Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $
Operating activities
Net earnings (loss) for the period 37,908 (2,504) 35,404
Non-cash items
Depreciation and amortization 21,531 4,603 26,134
Future income and resource taxes 10,497 - 10,497
Other (6,879) 1,039 (5,840)
----------------------------------------------------------------------------
63,057 3,138 66,195
Net change in non-cash working capital 3,010 122 3,132
----------------------------------------------------------------------------
66,067 3,260 69,327
Financing activities
Bank indebtedness 20,372 - 20,372
Common shares issued 641 - 641
Investing activities
Investments (10,000) - (10,000)
Property, plant and equipment (96,494) (1,907) (98,401)
Proceeds from disposal of investment 21,441 - 21,441
Effect of exchange rate changes on cash - 932 932
----------------------------------------------------------------------------
Change in cash and cash equivalents for
the period 2,027 2,285 4,312
24,247 10,913 35,160
----------------------------------------------------------------------------
26,274 13,198 39,472
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Consolidated Statements of Comprehensive Income
(in thousands of Canadian dollars)
(Unaudited) Three months Six months
ended ended
June 30 June 30
2008 2007 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $ $

Net earnings for the period 11,341 34,991 35,404 65,182
Other comprehensive income, net of tax
Unrealized gains (loss) on available for
sale investments (note 3) (5,727) (5,612) (7,802) 6,034
Cumulative translation adjustment (109) - 561 -
----------------------------------------------------------------------------
Comprehensive income 5,505 29,379 28,163 71,216
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Statements of Retained Earnings
(in thousands of Canadian dollars)
(Unaudited) Three months Six months
ended ended
June 30 June 30
2008 2007 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $ $

Retained earnings - beginning of period 192,023 88,204 167,960 58,013
Net earnings for the period 11,341 34,991 35,404 65,182
----------------------------------------------------------------------------
Retained earnings - end of period 203,364 123,195 203,364 123,195
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Contact Information

  • FNX Mining Company Inc.
    A. Terrance 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