FNX Mining Company Inc.
TSX : FNX

FNX Mining Company Inc.

May 08, 2008 06:30 ET

FNX Announces Q1 Results and Declares Commercial Production at Podolsky

TORONTO, ONTARIO--(Marketwire - May 8, 2008) - FNX Mining Company Inc. (TSX:FNX) ("FNX" or the "Company") reports net earnings of $24.1 million or $0.28 per share for the first quarter, including an initial contribution from its new Podolsky mine. This compares to net earnings of $30.2 million or $0.36 per share for the same period in 2007, which were bolstered by record high nickel prices. Mine operation revenues were a record $91.3 million, compared to $80.5 million in the first quarter of 2007. Record production of tons of ore, pounds of nickel and copper and ounces of total precious metals were achieved during the quarter. Table 1 summarizes the key financial and operating measures.

John Lill, President and CEO, stated that, "The initial production from the Podolsky mine this quarter was the first from our high margin footwall ores, which is expected to drive our growth over the next three years. The 11.7% copper grade from the Podolsky deposit helped to triple our copper production to a record 6.9 million lbs during the quarter. The Podolsky Q1 cash operating revenue per ton was $1,068 with cash operating costs of $359 per ton resulting in very strong cash operating margins of $709 per ton. In addition, the Company generated record operating revenues and cash flow, all achieved with significant improvements to our safety record."



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Table 1 - Unaudited Financial and Operating Highlights Q1 2008 Q1 2007
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Mining Operations
-----------------
Total Revenue (C$000) 91,323 80,473
Cash Operating Costs (C$000) 45,232 24,555
Cash Operating Margin (C$000) 46,091 55,918

Revenue per Ton Sold (C$) 321 391
Cash Operating Costs per Ton Sold (C$) 159 119
Cash Operating Margin per Ton Sold (C$) 162 272

Cash Cost per lb of Ni (US$) (net of by-product credits) 1.30 3.46

Net Earnings (Loss) (C$000) 25,019 30,191
Cash Flow from Operating Activities (C$000) 55,152 36,426
EBITDA (C$000) 45,734 53,760

Total Ore Sold (tons) 284,899 205,854
Nickel Ore Sold (tons) 199,054 133,630
Grade of Nickel Ore Sold (%Ni) 1.3 1.2
Payable Metal Sold - Nickel (000 lbs) 3,492 2,628
Copper Ore Sold (tons) 85,845 72,224
Grade of Copper Ore Sold (%Cu) 4.2 1.3
Payable Metal Sold - Copper (000 lbs) 6,892 2,261
Payable Metal Sold - Total Precious Metals (ozs) 7,272 5,961
Payable Metal Sold - Cobalt (000 lbs) 54.6 33.7

Mining Services
-----------------
Total Revenue (C$000) 49,393 -
Cash Operating Costs (C$000) 46,984 -
Cash Operating Margin (C$000) 2,409 -
Net Earnings (C$000) (956) -
Cash Flow from Operating Activities(C$000) 643 -

Consolidated
-----------------
Revenue 140,716 80,473
Net Earnings (Loss) (C$000) 24,063 30,191
Basic and Diluted Earnings per Share (C$) 0.28 0.36
Cash Flow from Operations (C$000) 55,795 36,426
Cash Flow per Share (C$) 0.66 0.43
EBITDA (C$000) 48,337 53,760
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The Company also announces that commercial production from the Podolsky Mine was achieved effective January 1, 2008. All production from the first quarter will be recorded as revenue and has been reported with our Q1-2008 financial and operating results. All production to date at the Podolsky Mine is from the high-grade Cu-Ni-Pt-Pd-Au lower portions of the 2000 deposit on the 2500 Level. Additional development is on-going to join the 1750 and 2500 Levels with a ramp from which cross cuts are being established to provide more working places. The Podolsky mine is scheduled to increase production during the year until the planned production rate of 1,200 tons per day is reached later in 2008. A total of 293,000 tons of ore is scheduled to be produced from the Podolsky Mine in 2008.

The average cash operating revenue per ton shipped during the quarter was $321, while the average cash operating cost per ton was $159 resulting in an average cash operating margin per ton of $162. This compares to $391, $119 and $272 per ton, respectively for the same period in 2007. The increased cash operating cost per ton this quarter was a result of: initial start-up at Podolsky, higher refining costs per ton because of much higher metal content in high-grade Podolsky ores, and increased processing costs.

The 2008 first quarter cash flow was a record $55.8 million ($0.66 per share) and EBITDA was $48.3 million, compared to $36.4 ($0.43 per share) and $53.8 million, respectively in the first quarter of 2007.

At the end of March 2008, the cash position was $29.1 million and the current value of the investment portfolio was $43.2 million, compared to $35.2 million and $35.6 million, respectively, at the end of December 2007. Capital expenditures during the quarter were $52.7 million, compared to $44.7 million for the comparable period in 2007. Net change in the cash balances as a result of operating, financings and investing activities was a net cash outflow of $6.0 million since December 31, 2007, compared to a net cash outflow of $7.1 million in the same period last year. Working capital is $54.2 million, compared to $70.2 million at the end of December 2007. Total assets are $1,067 million compared to $1,008 million at the end of last year. Subsequent to the end of the first quarter, FNX established a US$100 million secured line of credit facility for working capital and general corporate purposes.

Operations

For the first quarter of 2008, there were zero lost time injuries at the Sudbury operations and Mining Services Business ("MSB") USA and one lost time injury at MSB Canada. The total medical injury frequency rate ("TMIFR") for FNX operations, onsite contractors and exploration personnel declined by 9% to 6.9. MSB experienced a 51% decline in its TMIFR to 2.7 for the quarter, compared to 5.5 for the three months ending March 31, 2007. A record 284,899 (+38%) tons of ore were shipped during the first quarter, including 199,054 tons of nickel ore and 85,845 tons of copper ore. This compared to 205,854 tons shipped in the first quarter of 2007, composed of 133,630 tons of nickel ore and 72,224 tons of copper ore. Payable nickel this reporting period was 3.49 million pounds (+33%), payable copper 6.89 million pounds (+205%) and 7,272 ounces of platinum, palladium and gold, compared to 2.63, 2.26 and 5,961, respectively, for the quarter ending March 31, 2007. The increase in copper production is attributed to initial production of copper-rich footwall ore grading 11.7% Cu with significant TPM values from the Podolsky mine.

Highlights of first quarter operations included record 261,000 ton production from the Levack Complex, sale of 24,000 tons of initial production of high grade copper ore from the Podolsky mine and commissioning of new crushing, sampling and weighing facilities at Levack and Podolsky mines, which now allows direct ore shipment from all three mines.

The payable metals Vale Inco is required to pay for ore shipped by FNX are determined based on the metal which Vale Inco is able to recover from the various ore deposits. This will vary depending on the particular metallurgical composition of each ore deposit as determined by metallurgical testing of the various ore deposits. There are several different final payable metals terms for the various ore deposits at McCreedy West to reflect the differences in the metallurgical composition of the ore deposits. New interim processing costs terms and interim provisional payable metals terms, based on preliminary and limited metallurgical testing, have been established for the Levack and Podolsky mines. Additional and more extensive metallurgical testing, to be conducted over the next several months, is required in order to determine final payable metals terms and processing costs terms for both mines. Management anticipates this to be completed by year end. Podolsky's new interim provisional payable metals and processing costs terms are effective for all ore shipped from September 2007, the date ore shipments commenced from the Podolsky mine, until final payable metals and processing costs terms are determined, which management anticipates to be in place by year end. FNX's pre-production revenue credits accrued at December 31, 2007 and the metals production forecasts for 2008 were previously based on management's estimated payable metals and processing costs terms. The pre-production revenue credits were revalued using the new interim provisional payable metals and processing costs terms, resulting in a $1.6 million increase in the carrying value of Podolsky being recorded in the first quarter of 2008.

Levack's new interim provisional payable metals and processing costs terms replaced the Levack interim provisional terms that had been used up to December 31, 2007, which were based on those at McCreedy West. Levack's new interim provisional terms are effective from January 1, 2008 until final payable metals and processing costs terms are determined, which management anticipates to be in place by year end, and are less favourable to FNX than the previous interim provisional terms. Once final payable metals and processing costs terms are determined, they will also be applied to ore shipped from Levack in 2006 and 2007. The Company cannot, at this time, determine the amount, if any, of such adjustment.

Management considers the new provisional payable metals terms at both Levack and Podolsky to be conservative based on the results of the metallurgical testing FNX has conducted to date. Depending on the outcome of the final payable metals and costs terms there may be a material increase or decrease in payable metals and/or processing costs to be recorded.

Tables 2 and 3 summarize first quarter production statistics from the Levack Complex and Podolsky operations, respectively.



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Table 2 - Production and Sales Summary Three months ended March 31
Levack Complex 2008 2007 Change
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Ore sold (tons)
Nickel ore 199,054 133,630 65,424
Copper ore 61,733 72,224 (10,491)
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Total ore sold 260,787 205,854 54,933
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Grade of ore sold
Nickel ore (%Ni) 1.3 1.2 0.1
Copper ore (%Cu) 1.2 1.3 (0.1)

Payable metal sold
Nickel (000s lbs) 3,150 2,628 522
Copper (000s lbs) 2,257 2,261 (6)
TPM (ozs) 4,546 5,961 (1,415)
Cobalt (000s lbs) 52.9 33.7 19.2

Metal sales and costs
Revenue ($/ton of ore sold) 251 391 (140)
Cash cost ($/ton of ore sold) 140 119 21
Cash operating margin ($/ton of ore sold) 111 272 (161)
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Table 3 - Production and Sales Summary Three months ended March 31
Podolsky Mine 2008 2007 Change
----------------------------------------------------------------------------

Ore sold (tons)
Copper ore 24,112 - 24,112
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Grade of ore sold
Copper ore (%Cu) 11.7 - 11.7

Payable metal sold
Nickel (000s lbs) 342 - 342
Copper (000s lbs) 4,635 - 4,635
TPM (ozs) 2,726 - 2,726
Cobalt (000s lbs) 1.7 - 1.7

Metal sales and costs
Revenue ($/ton of ore sold) 1,068 - 1,068
Cash cost ($/ton of ore sold) 359 - 359
Cash operating margin ($/ton of ore sold) 709 - 709
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The average metal prices received during the first quarter were US$14.43 per lb for nickel, US$3.84 per lb for copper, US$2,727 per oz of platinum, US$630 per oz of palladium and US$1,013 per oz of gold. This compares to US$21.65, US$2.67, US$1,530, US$395 and US$771, respectively, in the same period last year. The Canadian dollar to US dollar exchange ratio was 1.00 for the three months to March 31, 2008, compared to 1.17 for the same period last year. The cash cost to produce a pound of nickel net of by-product credits for the quarter was US$1.30, compared to US$3.46 in the first quarter of 2007. The year over year difference reflected the sharply higher production of by-products this reporting quarter, compared to the similar period of 2007.

Capital expenditures of $52.7 million during this quarter included $18.0 million to support mine start up at Podolsky, $22.0 million at the Levack Complex, $9.5 million on Levack Footwall deposit ("LFD") development and $1.9 million for MSB.

At the end of March 2008, the Sudbury operations had 673 direct employees and 175 contractor employees, while MSB had 850 direct employees, including 372 in Canada and 478 in the US. The Company has over 500 unionized employees at the Sudbury operations whose collective agreement expires on June 30, 2008.

Development

Development of the LFD progressed during the first quarter. Drifting from the Levack mine 2650 Level reached the top of the mineralized envelope at Rob's footwall deposit ("Rob's") and exposed two narrow veins of massive sulfide mineralization. Drill stations were developed off the 2650 ramp and the decline continued to be deepened toward the second sublevel. Once the decline reaches the second sublevel during the second quarter, another crosscut is expected to expose Rob's again at the deeper level. In addition, drifting along the two veins is planned to begin early in the second quarter to explore their continuity and extent. A raise from the top of the Rob's for ventilation and secondary egress was initiated in first quarter with completion expected in the second quarter.

Late in the quarter, a contractor was mobilized and initiated shaft rehabilitation on the Levack mine No. 2 shaft below current active working levels. By year end 2008, access to the Levack mine 3600 Level is expected to be complete and excavation of a deeper access ramp to the LFD initiated. Concurrent infrastructure planning is underway to support the rapid transition to mining once the LFD is accessed. Other Levack mine development has focused on extending ramps for additional access to ore zones and to tie levels together to increase operating efficiency. Several raises were completed between levels and equipped for ventilation, egress and rock handling.

At McCreedy West, development for both the nickel deposits and the PM deposit continued. Significant exploration drifting to establish diamond drilling stations was also completed. Continued success in discovering additional nickel contact deposits at McCreedy West is expected to drive ongoing development requirements for both production and exploration activities.

Development at Podolsky, on both the 1750 and 2450 Levels progressed steadily during the quarter. A production ramp was started simultaneously on the 1750 and 2450 Levels in order to connect the levels and allow access to the ore at various sub-levels. The production ramp was actively developed throughout first quarter. It accessed and opened up the 2500 Level to allow stoping to begin in the first quarter. The production ramp was also driven up to the 2375 Level with the projected development of the 2375 Sub-Level to be done in the second quarter. The simultaneous development of the production ramp down from the 1750 Level progressed to the 1925 Level. Continued ramping and ore zone sub-level access will continue throughout the second quarter and for the remainder of 2008.

Mining Services Business

Revenues from MSB totaled $49.4 million for the three months ended March 31st. The operating margin for the same period was $2.4 million. Net earnings for the period after deductions for depreciation and amortization expenses including a charge for amortization of intangible assets of $0.8 million, were a loss of $1.0 million. Operating cash flow for the period was $0.6 million. Overall, the business climate in mining contracting remains positive, particularly in the US, and it is anticipated that the volumes of work will increase going forward. As at the end of the March 31st quarter, the MSB had a backlog of work to complete totaling $149 million.

Investments

On March 31, 2008, the fair market value of the FNX investment portfolio was $43.2 million, compared to a fair market value of $35.6 million on December 31, 2007. The $43.2 million value at the end of March 2008 resulted in a revaluation loss from year end 2007 of $2.1 million, net of tax. Pursuant to an agreement dated February 6, 2008, FNX acquired 3.509 million common shares of Strategic Resource Acquisition Corporation ("SRA") at a price of $2.85 per share, which was a 5% discount to the closing price on the date negotiations had commenced between the parties. MSB provides contract mining services to a wholly-owned subsidiary of SRA in the United States.

In addition, the Company currently holds 13.30 million common shares of Lake Shore Gold Corp., 7.66 million common shares of International Nickel Ventures Corporation ("INV"), 6.86 million common shares of Superior Diamonds Inc., 6.50 million common shares of Fieldex Exploration Inc., 1.07 million common shares of Visible Gold Mines Inc. and 3.15 million common share purchase warrants of INV.

Exploration

A total of 67,601 ft was drilled in 65 holes at the Sudbury area properties during this reporting quarter with slightly more than half represented by underground drilling. A high proportion of the underground drilling this quarter is attributed to drilling from Xstrata Nickel's ("Xstrata") Craig mine 2000 Level haulage drift into the McCreedy West Boundary nickel contact target and definition drilling on the LFD from Xstrata's Craig mine 4000 Level access ramp. Since January 2002, FNX has completed 4,175 boreholes for a total of 2.9 million ft of diamond drilling in Sudbury.

During the quarter, the LFD 4000 Level advanced exploration access program was completed by Xstrata from their Craig mine infrastructure. In excess of 360 ft of an interpreted footwall trunk vein was exposed, definition drilled and bulk sampled through a 15 ft x 17 ft drift. A 15,207 ton bulk sample was removed, hoisted to surface and run through the nearby McCreedy West sample tower. Assays from the first three sample lots received to date representing 5,547 tons averaged 8.76% Cu, 1.32% Ni and 9.82 g/t TPM. The bulk sample provides valuable insights into the style of mineralization and metallurgical testing, but is not indicative of future mining methods.

The footwall access ramp into the top of Rob's deposit mineral envelope late in the quarter from the Levack mine 2650 Level intersected two narrow high grade pyrrhotite-rich veins, as expected. Drilling east and west of the veins commenced at the end of the first quarter to confirm the continuity of the veins Diamond drilling of the LFD continued on several fronts, including definition drilling from the west side drill drift off the Craig mine 4000 Level access ramp. Detailed definition drilling from the 4000 Level to date has significantly enlarged the original LFD mineral envelope, extending it to the east by more than 150 ft.

Surface and underground drilling at the McCreedy West mine during this period focused on nickel contact targets east of the currently defined Inter Main deposits, including both the Canoe and McVack areas. Most of these holes were terminated at the base of the Sudbury Igneous Contact, but selected holes were extended into the footwall to test for Cu-Ni-TPM footwall mineralization. One of the final holes drilled to the east during the quarter intersected 10.4 ft of 1.29% Ni and 0.09% Cu. This drill has now been moved further west along the Craig mine 2000 Level drill drift to test the McCreedy West Boundary area located near the western boundary with Xstrata's property in the second quarter.

At the Podolsky 2000 deposit, detailed underground drilling during first quarter followed the massive sulphide, high grade veins up-dip from the 2450 Level concentration in an attempt to establish the distribution of these high grade zones within the normal grade mineral envelope. Preliminary geologic modeling of the up-dip massive sulphide veins indicate that they dip sub-vertical and are orientated roughly sub-parallel to the long axis of the 2000 deposit. The high grade veins also appear to be concentrated along the southern margin within the larger 2000 breccia deposit. Some recent holes from the up-dip massive sulphide vein envelope include 64.9 ft grading 21.35% Cu, 0.50% Ni and 19.3 g/t TPM in hole FNX4284 and 26.2 ft averaging 15.6% Cu, 0.30% Ni and 11.1 g/t TPM from FNX4317.

Surface drilling of the Nickel Ramp deposit during the fourth quarter of 2007 and into the first quarter of 2008 tested the potential for a large, low grade nickel contact deposit located close to surface. Selected results from recent holes included hole FNX4400, which intersected 354.1 ft averaging 1.13% Ni and 0.23% Cu and FNX4401, which cut 181.6 ft of 1.00% Ni and 0.16% Cu. Current plans call for an additional 45,000 ft of surface drilling at Nickel Ramp in 2008 to further assess its potential.

For the first time in almost three years, a drill was mobilized to the Victoria property to test the down-dip extension of the Powerline discovery. Drilling at both the Falconbridge Footwall and Foy Offset properties is scheduled for the second quarter and late in 2008, respectively.

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; 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 First Quarter Conference Call on May 8, 2008 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 "FNX Mining Conference Call"

Replay Access information:
Toll-Free Access: 1-800-408-3053 or 416-695-5800
------------------------------------------------
Passcode: 3260100#
Available until June 7, 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 Sheet
As at
(in thousands of Canadian dollars) March 31 2008 December 31 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $
Assets (Unaudited)
Current
Cash and cash equivalents 29,137 35,160
Accounts receivable 121,899 103,257
Inventory 1,762 4,060
Prepaid and other assets 1,124 1,142
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153,922 143,619
Investments 43,166 35,603
Property, plant and equipment 857,721 815,376
Intangible assets 5,780 6,605
Reclamation deposits 6,485 6,485
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1,067,074 1,007,688
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----------------------------------------------------------------------------

Liabilities

Current
Accounts payable and accrued liabilities 99,504 72,405
Deferred revenue 250 975
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99,754 73,380
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Mine closure and site restoration 5,164 5,087
Future income and resource taxes 186,915 178,180
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192,079 183,267
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291,833 256,647
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Shareholders' equity
Share capital 568,160 567,700
Contributed surplus - stock-based
compensation 10,898 9,816
Retained earnings 192,023 167,960
Accumulated other comprehensive income 4,160 5,565
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775,241 751,041
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1,067,074 1,007,688
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Consolidated Segmented Balance Sheet
As at March 31, 2008
(in thousands of Canadian dollars)
(Unaudited)
Mining Mining Total
Operations Services
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $
Assets
Current
Cash and cash equivalents 18,957 10,180 29,137
Accounts receivable 82,207 39,692 121,899
Inventory 1,218 544 1,762
Prepaid and other assets 742 382 1,124
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103,124 50,798 153,922
Investments 43,166 - 43,166
Property, plant and equipment 827,491 30,230 857,721
Intangible assets - 5,780 5,780
Reclamation deposits 6,485 - 6,485
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980,266 86,808 1,067,074
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----------------------------------------------------------------------------
Liabilities

Current
Accounts payable and accrued liabilities 76,800 22,704 99,504
Deferred revenues - 250 250
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76,800 22,954 99,754
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Mine closure and site restoration 5,164 - 5,164
Future income and resource taxes 184,457 2,458 186,915
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189,621 2,458 192,079
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266,421 25,412 291,833
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Consolidated Statements of Operations
Three months ended March 31
(in thousands of Canadian dollars except earnings per share)
(Unaudited)
2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $

Operating revenues 140,716 80,473
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Operating expenses
Expenses, excluding depreciation and
amortization 92,216 24,555
Depreciation and amortization 10,890 4,879
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103,106 29,434
----------------------------------------------------------------------------

37,610 51,039
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Expenses
Administration 2,675 2,293
Capital taxes - 450
Depreciation 220 97
Stock-based compensation 1,174 888
Other expenses (income) (2,822) (1,267)
----------------------------------------------------------------------------
1,247 2,461
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Earnings before taxes 36,363 48,578

Income and resource taxes 12,300 18,387
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Net earnings for the period 24,063 30,191
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Basic earnings per share 0.28 0.36

Diluted earnings per share 0.28 0.36
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Consolidated Segmented Statement of Operations
For the three months ended March 31, 2008
(in thousands of Canadian dollars) Mining Mining
(Unaudited) Operations Services Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $

Operating revenues 91,323 49,393 140,716
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Operating expenses
Expenses, excluding depreciation
and amortization 45,232 46,984 92,216
Depreciation and amortization 8,593 2,297 10,890
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53,825 49,281 103,106
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37,498 112 37,610
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Expenses
Administration 2,675 - 2,675
Depreciation 220 - 220
Stock-based compensation 598 576 1,174
Other expenses (income) (2,423) (399) (2,822)
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1,070 177 1,247
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Earnings before taxes 36,428 (65) 36,363

Income and resource taxes 11,409 891 12,300
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Net earnings for the period 25,019 (956) 24,063
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Consolidated Statements of Cash Flow
For the three months ended March 31
(in thousands of Canadian dollars)
(Unaudited)
2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $

Operating activities
Net earnings for the period 24,063 30,191
Non-cash items
Depreciation and amortization 11,110 4,976
Stock-based compensation 1,174 888
Future income and resource taxes 8,974 6,515
Interest on deferred payment obligation - 63
Loss on disposal of fixed assets (94) -
Decrease in value of investments held-for-trading 38 -
Other (244) -
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45,021 42,633
Net change in non-cash working capital 10,775 (6,207)
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55,796 36,426
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Financing activities
Common shares issued 340 1,189
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Investing activities
Investments (10,000) -
Property, plant and equipment (52,660) (44,693)
----------------------------------------------------------------------------
(62,660) (44,693)
----------------------------------------------------------------------------

Effect of exchange rate changes on cash 501 -
----------------------------------------------------------------------------
Change in cash and cash equivalents for the period (6,023) (7,078)

Cash and cash equivalents - beginning of period 35,160 115,117
----------------------------------------------------------------------------

Cash and cash equivalents - end of period 29,137 108,039
----------------------------------------------------------------------------
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Consolidated Segmented Statement of Cash Flow
For the three months ended March 31, 2008
(in thousands of Canadian dollars) Mining Mining
(Unaudited) Operations Services Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $

Operating activities
Net earnings for the period 25,019 (956) 24,063
Non-cash items
Depreciation and amortization 8,813 2,297 11,110
Stock-based compensation 598 576 1,174
Future income and resource taxes 8,974 - 8,974
Loss on disposal of fixed assets - (94) (94)
Decrease in value of investments
held-for-trading 38 - 38
Other (244) - (244)
----------------------------------------------------------------------------
43,198 1,823 45,021
Net change in non-cash working capital 11,955 (1,180) 10,775
----------------------------------------------------------------------------
55,153 643 55,796
----------------------------------------------------------------------------

Financing activities
Common shares issued 340 - 340
----------------------------------------------------------------------------

Investing activities
Investments (10,000) - (10,000)
Property, plant and equipment (50,783) (1,877) (52,660)
----------------------------------------------------------------------------
(60,783) (1,877) (62,660)
----------------------------------------------------------------------------

Effect of exchange rate changes on cash - 501 501
----------------------------------------------------------------------------

Change in cash and cash equivalents
for the period (5,290) (733) (6,023)

Cash and cash equivalents
- beginning of period 24,247 10,913 35,160
----------------------------------------------------------------------------

Cash and cash equivalents
- end of period 18,957 10,180 29,137
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Statements of Retained Earnings
For the three months ended March 31
(in thousands of Canadian dollars)
(Unaudited)
2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $

Retained earnings - beginning of period 167,960 58,013
Net earnings for the period 24,063 30,191
----------------------------------------------------------------------------
Retained earnings - end of period 192,023 88,204
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----------------------------------------------------------------------------


Consolidated Statements of Comprehensive Income
For the three months ended March 31
(in thousands of Canadian dollars)
(Unaudited)
2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $

Net earnings for the period 24,063 30,191
Other comprehensive income, net of tax
Unrealized gain/(Loss) on available
for sale investments (2,075) 11,646
Cumulative translation adjustment 670 -
----------------------------------------------------------------------------
Comprehensive income 22,658 41,837
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Contact Information

  • FNX Mining Company Inc.
    John W. Lill
    President 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 and Corporate Secretary
    (416) 628-5929
    Email: info@fnxmining.com
    Website: www.fnxmining.com