FNX Mining Company Inc.
TSX : FNX

FNX Mining Company Inc.

November 02, 2006 17:01 ET

FNX Mining Continues to Report Record Quarterly Results

TORONTO, ONTARIO--(CCNMatthews - Nov. 2, 2006) - FNX Mining Company Inc. (TSX:FNX) is pleased to report that it has continued to significantly improve and maximize operating results at its 100% owned Sudbury, Ontario mining operations and is today reporting record operating and financial quarterly results. During the third quarter of 2006, the Company generated its highest quarterly revenue of $53.0 million ($320 per ton), its lowest cash operating cost of $100 per ton and record total cash operating margins of $36.4 million ($220 per ton), a 69% margin rate. The third quarter EBITDA totaled $34.4 million with net earnings of $20.5 million ($0.24 per share). The cash cost to produce a pound of nickel, net of by-product credits, was a minus $0.07.

In the third quarter of 2006, the Company continued to expand production and lower operating costs at its McCreedy West Mine; this, along with very strong metal commodity prices, resulted in the best operating and financial results in the Company's history, including:

- the highest total and per ton revenues,

- the lowest cash operating cost per ton of ore sold,

- the highest total and per ton cash operating margins,

- the highest total EBITDA

- the most tons of ore shipped and sold,

- the most payable pounds of nickel, copper and ounces of precious metals produced,

- the highest cash flows, and continued zero debt.

Terry MacGibbon, FNX Mining's President and Chief Executive Officer said: "Because of the hard work and dedication of our employees and contract workers, the Company has continued to both increase its production and lower its cash operating costs. The continuing quarter over quarter operating improvements and operating cost reductions are particularly impressive in this era of severe worldwide capital and operating cost increases and, even though we are incurring significant capital expenditures putting two more mines into production and continuing to explore the Levack Footwall discovery, we continue to maintain a very strong balance sheet as our strong cash flows are nearly sufficient for the Company to fund all capital expenditures from on-going operations."

He added: "We are looking forward to continuing outstanding financial results as we expect to significantly increase our total production in 2007 by bringing the Levack nickel deposits into production in 2007. In addition, the Podolsky footwall copper-nickel-precious metal 2000 Deposit is expected to be in preproduction in late 2007 and full production in 2008. When the McCreedy West, Levack and Podolsky Mines are in full production, the Company expects its annualized production rate to be about 1.4 million tons of ore per year. The possible development of the high-grade Cu-Ni-Pt-Pd-Au Levack Footwall deposits would significantly add to the Company's future production and dramatically increase profitability".

The Company's third quarter realized average revenue of US$14.20 per pound of nickel and US$3.60 per pound of copper were US$0.98 and US$0.12 respectively more than the LME average three month price, resulting in additional revenue of $8.8 million from settlements for metal sales that were previously priced in prior periods.

The net change in cash balance as a result of operating, financing and investing activities was a net cash outflow of $4.8 million since June 30, 2006, compared to $8.5 million of cash inflow in the third quarter of 2005. The net change in cash balances for 2006 year to date was a net cash outflow of $19.6 million, compared with $0.7 million of cash inflow during the same period in 2005. The Company remains debt free and the Company's cash position of $132.9 million at September 30, 2006 along with the market value of its liquid securities totaling $40.0 million are sufficient to meet all planned cash expenditures in 2006 and 2007.



UNAUDITED OPERATING HIGHLIGHTS Q3 2006 Q3 2005 YTD 2006 YTD 2005

Total Revenue (C$000) 52,964 18,588 119,743 61,876
Cash Operating Costs (C$000) 16,520 12,254 48,438 35,452
Cash Operating Margin (C$000) 36,444 6,334 71,305 26,424

Revenue per Ton Sold (C$) 320 166 257 202
Cash Operating Costs per Ton
Sold (C$) 100 110 104 116
Cash Operating Margin per Ton
Sold (C$) 220 56 153 86
69% 34% 60% 43%

Cash Cost per lb of Ni (US$)
(net of by-product credits) (0.07) 3.35 0.51 3.19

Net Earnings (Loss) (C$000) 20,476 (2,218) 49,013 4,121
Net Earnings per Share (C$) 0.24 (0.04) 0.59 0.08
EBITDA (C$000) 34,439 3,050 63,711 13,736

Cash Flow (C$000) 27,316 4,523 49,626 12,962
Debt (C$000) Nil Nil Nil Nil

Total Ore Sold (tons) 165,306 111,795 466,784 305,963
Nickel Ore Sold (tons) 75,248 74,616 233,040 242,293
Grade of Nickel Ore Sold (%Ni) 1.8 1.9 1.6 1.7
Payable Metal Sold - Nickel
(000 lbs) 2,280 1,798 6,139 5,867
Copper Ore Sold (tons)2 90,058 37,179 233,744 63,670
Grade of Copper Ore Sold (%Cu) 1.4 1.8 1.6 3.0
Payable Metal Sold - Copper
(000 lbs) 2,640 1,344 7,309 4,158
Payable Metal Sold - Total
Precious Metals (oz) 7,935 3,165 22,225 5,911

Realized Nickel Prices (US$/lb) 14.20 6.28 10.82 6.85
Realized Copper Prices (US$/lb) 3.60 1.73 3.29 1.56
C$ /US$ 1.12 1.20 1.13 1.22


Operations

There were no lost time injuries and a total of 9 medical aid injuries in the quarter, including all Company and contractor personnel working on all aspects of the company's mine production and capital projects. Both the Levack and McCreedy West projects have worked Lost Time Injury free in 2006. There has been a marked improvement in the total medical injury frequency from the first half of the year.

During the third quarter of 2006, the Company mined and shipped from its McCreedy West Mine a total of 165,306 tons of ore to the custom mill resulting in the sale of 2.3 million pounds of nickel, 2.6 million pounds of copper and 7,935 ounces of total precious metals. Nickel sales, along with significant byproduct revenues from copper, platinum, palladium, gold and cobalt, resulted in operating revenues of $53.0 million. Mine cash operating costs for the quarter totaled $16.5 million, providing a cash operating margin of $36.4 million, a 69% margin. The revenue per ton of ore sold was $320 at a cash cost of $100 per ton resulting in a cash operating margin per ton of ore sold of $220. The Company realized revenues of US$14.20 per pound of nickel sold and had cash costs, net of by-product credits, of a negative US$0.07 per pound of nickel sold.

At the Levack Mine property, work is progressing on the shaft hoisting and ore handling systems, including hoist modernization, loading pocket, headframe dump and underground crushing. Shipments of preproduction and development ore are expected later in the year with full mine production expected in 2007. Level rehabilitation also progressed as planned. Mine development has started to the "near term" production targets from the 1800 Level, and delivery of all critical path long lead items continues to meet schedule.

Shaft sinking at Podolsky is now completed, and installation of the loading pocket, shaft changeover and surface infrastructure is progressing well. The project is scheduled to start development from the 2450 Level in the 4th quarter, and work has started on surface preparation for ventilation and mine secondary egress.

Investments

FNX continues to hold 3,150,230 common shares and 2,347,886 common share purchase warrants of International Nickel Ventures Corporation (TSX:INV), 7,716,594 million common shares of Dynatec Corporation (TSX:DY), 13,300,000 million common shares of Lake Shore Gold Corp. (TSX:LSG) and 6,860,715 common shares of Superior Diamonds Inc (TSX VENTURE:SUP)., all of which are publicly traded corporations. The combined book value is $30.4 million and, as at October 31, 2006, the market value was $41.0 million.

Exploration

Drilling at the McCreedy West Mine during the third quarter of 2006 continued to delineate and define additional resources and reserves at the Inter Main, East Main and PM Deposits. For the past two years, underground drilling at the McCreedy West Mine has been successful in outlining sufficient new reserves to replace those mined during the year and results to date this year indicate that this objective will also be achieved for the current year.

The bulk of the Company's drilling during the quarter was concentrated on the Levack Footwall Deposits ("LFD") and its associated mineralized systems (including the Rob's Footwall Deposit), as well as contact Ni and other footwall Cu-Ni-PGE targets on the Levack Mine property. As reported in the most recent LFD press release on September 13, 2006, successful drill results continue to expand the LFD mineralized system, and confirm its grade and potential. Drilling to date from both underground and surface platforms at the Levack Mine property and Xstrata Nickel's Craig Mine has continued to expand the LFD to a dip length of 1,600 feet. The known plunge of the entire mineralized footwall system to date, from the top of Rob's Footwall to the most down-dip hole in the Lower Levack Footwall Zone, is over 2,300 feet. The deposit remains open, and drilling and borehole geophysical surveys (UTEM and RIM) completed to date indicate that the LFD, the transitional Rob's Footwall and the Lower Levack Footwall deposits may be connected and form one integrated, polymetallic Cu-Ni-Pt-Pd-Au mineralized system. Additional drilling will be required to confirm this relationship.

Drilling from underground platforms at Xstrata Nickel's Craig Mine was interrupted late in the quarter due to logistical and accessibility issues. The issues are being resolved and drilling from Xstrata Nickel's Craig Mine is expected to resume early in November. During the quarter, the Company initiated drilling on the up-dip extension of the Levack Footwall Deposit and the Rob's Deposit with a drill rig operating from FNX's Levack Mine. FNX currently has three surface drills and one underground drill testing the Levack footwall deposits and surrounding areas and expects two more drill rigs to re-start drilling from Xstrata Nickel's Craig Mine in early November with a third drill rig planned for mid-November.

FNX has initiated the construction of ore and waste handling systems on the Levack Mine 2650 level as a precursor to ramp development into the Rob's Footwall and up-dip extension of the LFD. This development will also provide strategically located drill platforms on which to test the Levack footwall deposits as quickly as possible.

Surface mapping and drilling programs are being conducted on the Company's wholly owned subsidiary, Aurora Platinum Corp.'s, Foy and Falconbridge properties.

Non-GAAP Performance Measures

This press release contains certain non-GAAP measures like cash operating margin, EBITDA, etc. Please see the Q3 - 2006 MD&A on SEDAR for discussion on non-GAAP performance measures.

Further Information

The full Q3 - 2006 Financial Statements, related notes and MD&A are posted on SEDAR and on the corporate web site at www.fnxmining.com.

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 and the SEC in the United States of America.

CONFERENCE CALL

FNX will be hosting a 2006 Third Quarter Conference Call on August 3 2006 at 10:00am EST.




CONFERENCE CALL numbers are:

Live in North America:
Toll-Free Access: 1-866-542-4239
Access Code: Ask for FNX Mining Conference call

Replay Access information:
Toll-Free Access: 1-800-408-3053
Passcode: 3201397#
Available until December 1, 2006


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

Contact Information

  • FNX Mining Company Inc.
    Terry MacGibbon
    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