Quadra FNX Mining Ltd.

Quadra FNX Mining Ltd.

June 16, 2010 09:00 ET

Quadra FNX Provides an Update on State Grid International Development MOU

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 16, 2010) - Quadra FNX Mining Ltd. ("Quadra FNX" or "the Company") (TSX:QUX) announces that the memorandum of understanding ("MOU") entered into with State Grid International Development Limited ("SGID") (see Press Release dated March 8, 2010) expired on June 15, 2010; the parties were not able to conclude a definitive agreement for the formation of a joint venture (the "Strategic JV") prior to expiry of the MOU. As a result, Quadra FNX is no longer under an obligation to deal exclusively with SGID. The private placement of subscription receipts which closed on March 26, 2010 will also be unwound; the proceeds from the financing, and the Quadra FNX shares, which have been held in escrow pending formation of the Strategic JV, will be returned to SGID and Quadra FNX, respectively.

The Feasibility Study work to date has identified that a significant level of capital expenditure would be required in advance of receipt of project permits in order to meet the targeted completion date in 2013. These expenditures would be for long lead-time equipment and detailed engineering studies. SGID were not prepared to make this financial commitment prior to the receipt of all necessary permits. Quadra FNX and SGID are both open to discussions once the ongoing Feasibility Study has been completed and the permitting process is further advanced. In the meantime, Quadra FNX is free to engage and re-engage negotiations with other third parties, which have continued to express interest in the project.

Since the initial announcement of the SGID MOU, Quadra FNX has continued to advance the Sierra Gorda project. The Company is progressing the US$40 million Feasibility Study which is expected to be completed by year-end. The current estimate for total costs for the project, up to the commencement of production, remains in the US$2 billion range. In May 2010 the Company filed the Sierra Gorda Environmental Impact Study ("EIS"), which is a key step in the Chilean permitting process. The EIS includes a potential expanded project scope comprising an SX/EW operation and a phased expansion up to 190,000 t/d (from 110,000t/d) of sulfide copper ore. Quadra FNX has also obtained the necessary surface rights in the Sierra Gorda project area, and made material progress on the litigation cases.

Paul Blythe, President and CEO of Quadra FNX commented; "although we did not conclude the MOU with SGID at this time, we intend to remain on our previously stated development timeline. With the added financial flexibility provided through the Quadra FNX merger, and the re-incorporation of 100% of the Franke mine into our asset portfolio, we will be able to meet the immediate financial needs of the project. Based on our expectation that the permits are forthcoming, we will continue to procure and place orders for equipment in advance of completing the Feasibility Study and between Feasibility and the receipt of final project permits. Quadra FNX has a number of options to finance the project, and we intend to pursue all of them".

About Quadra FNX Mining Ltd. (TSX:QUX)

Quadra FNX Mining Ltd. is a leading mid-tier copper mining company with corporate offices in Vancouver, B.C. and Toronto, Ontario. Quadra FNX produces copper and platinum group metals from its operating mines: the Robinson mine in Nevada, the Carlota mine Arizona, Franke mine in northern Chile, and the McCreedy West, Levack and Podolsky mines in Sudbury, Ontario. The company possesses several advanced development projects, including the Sierra Gorda copper-molybdenum project in Chile, the Morrison Deposit in Sudbury, and the Malmbjerg molybdenum development project in Greenland. Quadra FNX employs approximately 1,650 people in North and South America.

This Press Release contains "forward-looking information" that is based on Quadra FNX's expectations, estimates and projections as of the dates as of which those statements were made. This forward-looking information includes, among other things, statements with respect to the near-term financing and development of the Sierra Gorda project. Generally, this forward-looking information can be identified by the use of forward-looking terminology such as "outlook", "anticipate", "project", "target", "believe", "estimate", "expect", "intend", "should", "scheduled", "will", "plan", "would" and similar expressions. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause Quadra's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information and is developed based on assumptions about such risks, uncertainties and other factors, including but not limited to:

  • uncertainties relating to the receipt and timing of any necessary government and regulatory approvals;
  • uncertainties relating to the availability of debt and equity financing to Quadra FNX on acceptable terms;
  • fluctuations in copper and other metal prices;
  • uncertainties related to the possible recalculation or reduction in the Quadra FNX's mineral reserves and resources;
  • uncertainties related to actual capital costs, operating costs and expenditures, production schedules and economic returns from the Company's mining projects;
  • risks associated with Quadra FNX's ongoing litigation relating to its Sierra Gorda property;
  • uncertainties relating to the production ramp-up at the Franke Mine;
  • uncertainties related to the amount of funding required to achieve full production levels at the Franke Mine;
  • uncertainties related to the construction quality and structural design at the Franke Mine;
  • uncertainties related to the current global financial conditions;
  • inherent hazards and risks associated with mining operations;
  • uncertainties related to the competitiveness of the mining industry;
  • risks associated with Quadra FNX being subject to government regulation, including changes in regulation;
  • risks associated with Quadra FNX being subject to extensive environmental laws and regulations, including changes in regulation;
  • risks associated with Quadra FNX's need for governmental licenses and permits;
  • political and country risk in the jurisdictions in which Quadra FNX operates;
  • risk of water shortages and risks associated with competition for water;
  • increases in off-site transportation and concentrate processing costs;
  • risks related to the stability of mine pit walls;
  • risks associated with costs of operating supplies, including sulphuric acid;
  • risks in the nature of investments; and
  • risks related to hedging contracts and exposure to the credit risk of counterparties.

A discussion of these and other factors that may affect Quadra FNX's actual results, performance, achievements or financial position is contained in the filings by Quadra FNX with the Canadian provincial securities regulatory authorities, including Quadra FNX's Annual Information Form. Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to the continued operation of Quadra FNX's mining operations, no material adverse change in the market price of commodities, that the mining operations will operate in accordance with Quadra FNX's public statements and achieve its stated production outcomes, and such other assumptions and factors as set out herein. Although Quadra FNX has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate. Accordingly, readers should not place undue reliance on forward-looking statements. Quadra FNX disclaims any intent or obligations to update or revise publicly any forward-looking statements whether as a result of new information, estimates or options, future events or results or otherwise, unless required to do so by law.

Contact Information

  • Quadra FNX Mining Ltd.
    Media and Investor Relations Contact
    Derek White, Executive Vice President, Corporate Development
    (604) 689-8550
    Quadra FNX Mining Ltd.
    Media and Investor Relations Contact
    David Constable, Vice President, Investor Relations
    (416) 628-5929