FNX Mining Company Inc.
AMEX : FNX
TSX : FNX

FNX Mining Company Inc.

August 04, 2005 07:00 ET

FNX Mining Reports Stronger Operating and Financial Results for the Second Quarter

TORONTO, ONTARIO--(CCNMatthews - Aug. 4, 2005) - FNX Mining Company Inc. (TSX:FNX)(AMEX:FNX) ("FNX") reports financial and operating results for the three months ending June 30, 2005. The complete financial statements, related notes and management discussion and analysis are available at www.fnxmining.com and www.sedar.com.

Financial Results

FNX posted higher revenues, net earnings and earnings per share in the second quarter of 2005 than in either the second quarter of 2004 or the first quarter of 2005. Operating revenues in the second quarter of 2005 were $21.9 million, approximately 61% higher than in the second quarter of 2004 and 45% higher than in the first quarter of 2005. Net earnings were $3.1 million or $0.06 per share for this quarter, compared to net earnings of $0.2 million or $0.00 per share in the second quarter of 2004 and $0.7 million or $0.01 per share in the first quarter of 2005. Cash flow from operating activities was $3.6 million, equal to $0.07 per share, compared to $1.1 million or $0.02 per share in the same period in 2004.

For the first six months of 2005 operating revenues totaled $37.0 million, approximately 60% higher than the comparable period in 2004. Net earnings for the year to date were $3.8 million or $0.08 per share or an increase of 157% from the $1.5 million or $0.03 per share in the first six months of 2004. Cash flow from operating activities was $9.0 million or $0.18 per share for the first half of 2005, compared to $2.3 million or $0.05 per share in the first half of 2004.



Consolidated Financial Results
(Cdn$000s, except per share data):

Three months ended: Six Months ended:
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
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Revenue $ 21,923 $ 13,624 $ 37,007 $ 23,135
Earnings 3,094 178 3,822 1,489
Earnings per share $ 0.06 $ 0.00 $ 0.08 $ 0.03


Note: The Company accounts for the Sudbury Joint Venture ("SJV") operations on a 100% consolidated basis, although its ownership interest is 75% of the SJV. The remaining 25% ownership interest in the revenue, expenses, assets and liabilities of the SJV is accounted for as "non-controlling interests".

FNX's cash position at June 30, 2005 was $49.0 million, a decrease of $1.6 million from March 31, 2005 and $7.8 less than December 31, 2004. Working capital was $65.1 million representing an increase of $4.1 million from March 31, 2005 and a decrease of $3.7 million from December 31, 2004. The company still had no debt at the end of this reporting period.

Operating Results

FNX and its Sudbury Joint Venture partner experienced one minor lost time accident and no reportable environmental incidents during the second quarter of 2005. For the three years of activities by the Sudbury Joint Venture, there have been only two lost time accidents and no reportable environmental incidents.

FNX mined and processed more tons of ore and produced more pounds of nickel and copper during the second quarter of 2005 than in either the second quarter of 2004 or the first quarter of 2005. The Sudbury operation produced 2.1 million pounds of nickel in the second quarter at an average cash expense of $119 per ton of ore shipped and sold or US$3.03 per pound of nickel sold, net of by-product credits. Net average cash operating revenue per ton of ore sold during this reporting period was $238, producing an average cash operating margin per ton of ore sold of $119. This compares to an average cash operating margin per ton of ore sold for the second quarter of 2004 of $62. Earnings from operations during the quarter were $7.1 million, compared to $2.6 million in the same period in 2004. Year to date earnings from operations were $10.1 million.

The average realized nickel price for the second quarter was US$7.21 per lb and for the first half of 2005 it was US$7.07 per lb. These prices compare to US$5.64 per lb and US$6.02 per lb, respectively, in 2004. The average realized copper price during the second quarter was US$1.48 per lb and US$1.46 per lb for the first half of the year. This compares to US$1.23 per lb and US$1.21 per lb for the first quarter and first half of 2004, respectively.

For the first six months of 2005, FNX and its Sudbury Joint Venture partner produced 3.6 million pounds of nickel and 2.2 million pounds of copper. During the first half of 2005, the average net payable revenue per ton of ore sold was $222 and the average cash expense per ton of ore sold was $124, yielding an average operating margin per ton of ore sold of $98.



Production

Three months ended: Six months ended:
April 30, April 30, April 30, April 30,
2005 2004 2005 2004
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Operating statistics
(100% level):
Ore mined (tons) 93,586 73,521 168,610 115,619

Ore sold (tons) 92,108 75,980 166,328 115,519
Ni ore sold (tons) 86,349 72,044 156,164 108,769
Ni ore grade (% nickel) 1.7 1.6 1.6 1.7
Cu ore sold (tons) 5,759 3,936 10,164 6,750
Cu ore grade (% copper) 8.9 5.9 8.1 6.3
Payable nickel (000s lbs) 2,100 1,556 3,628 2,509
Payable copper (000s lbs) 1,324 669 2,166 1,179


In this quarter a total of 93,586 tons of ore was mined and 92,108 tons of ore was sold composed of 86,349 tons of nickel ore averaging 1.7% nickel and 5,759 tons of copper ore grading 8.9% copper. This compares to 73,521 tons of ore mined and 75,980 tons of ore sold during the same period in 2004. For the first half of 2005, mined ore totaled 168,610 tons. Sold ore for the first six months was composed of 156,164 tons of nickel ore grading 1.6% nickel and 10,164 tons of copper ore averaging 8.1% copper.

Development

Development and pre-production activities at the PM Deposit continued through the second quarter and have advanced ed to the point whereby ore mined and shipped from the PM Deposit commencing May 1, 2005 will be recorded as revenue in the statement of operations starting July 1, 2005. Pre-production revenues from ore mined up to and including April 30, 2005 totaled $3.6 million and were credited against the PM Deposit's capitalized costs.

Reconditioning of the No. 2 Shaft at the Levack Mine progressed during the second quarter. All reconditioning of surface facilities was completed and approved during the quarter. The hoist ropes were installed in shaft compartments # 1 and #2, while the # 3 compartment was reconditioned to the 1800 ft level. All levels have been inspected to the targeted 2200 ft level. The Levack No. 2 Shaft is scheduled to be operational late in the third quarter or early in the fourth quarter of 2005.

Shaft sinking at the Podolsky Property continued throughout the second quarter and reached a vertical depth of 562 ft by the end of the second quarter. By the end of July, the shaft was at a depth of 780 ft and is scheduled for completion at a depth of 2,450 ft early in 2006.

Exploration Results

During the second quarter of 2005 FNX completed 70,631 ft of surface and underground drilling in 138 holes, while year to date drilling totaled 132,079 ft in 281 holes. Surface drilling during the quarter totaled 32,336 ft in 11 holes at the Levack Footwall Discovery and Podolsky and Kirkwood Properties. Underground drilling consisted of 38,295 ft in 127 holes located at the McCreedy West Mine and on the Levack Footwall Discovery from Falconbridge's Craig Mine. Based on the success of the Levack Footwall Discovery, the 2005 exploration budget was increased by $2.5 million to $13.9 million. Currently there are five surface and two underground drill rigs testing the Levack Footwall Discovery. Further results from the Levack Footwall Discovery are scheduled for release in September.

The 2005 exploration budget for the Sudbury properties of Aurora Platinum Corp. ("Aurora") was $2.5 million. Approximately $0.5 million of the budget was expended prior to the acquisition of Aurora by FNX and Dynatec Corporation ("Dynatec") on July 1, 2005. The $2.0 million budget balance will be spent in the last half of this year. Initial surface drilling began on both the Falconbridge and Foy-Bowell Properties early in the third quarter of 2005.

Subsequent Events

On July 1, 2005 FNX completed the acquisition of Aurora in exchange for the issuance of approximately 4.3 million FNX common shares. Simultaneously a 50% interest in Aurora was sold to Dynatec in exchange for $12.2 million in cash and approximately 7.7 million Dynatec common shares. For accounting purposes, the difference between the fair value ascribed to FNX Mining shares on the purchase of Aurora and the compensation received from Dynatec for 50% of Aurora sold to Dynatec was deemed to result in a one-time, pre-tax, non-cash $2.7 million loss, which will be recognized in the third quarter results.

Conference Call

FNX will be hosting a Second Quarter conference call on Thursday, August 4th, 2005 at 4:15 pm Eastern Time. Conference call numbers are:



Live in North America:

416-340-2216 or 1-866-898-9626
Access Code: Ask for FNX Mining Conference call

A replay is available until midnight, August 12th, 2005 at:

416-695-5800 or 1-800-408-3053
Access Code: 3159979#
Slides for the conference call may be accessed on the Company's
website home page at www.fnxmining.com


Forward-Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements are subject to a variety of risks and uncertainties beyond the company's ability to control or predict which could cause actual events or results to differ materially from those anticipated in such forward-looking statements. For example, in this news release statements about future development, production, foreign exchange rates and metal prices are forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements.

For further information, please contact: FNX Website - www.fnxmining.com

Contact Information

  • FNX Mining Company Inc.
    Terry MacGibbon
    President and CEO
    (416) 628-5922
    (416) 360-0550 (FAX)
    tmacgibbon@fnxmining.com
    or
    FNX Mining Company Inc.
    Ronald P. Gagel
    Vice President and CFO
    (416) 368-0990
    (416) 360-0550 (FAX)
    rgagel@fnxmining.com
    or
    FNX Mining Company Inc.
    David Constable
    Vice President, Investor Relations and Corporate Affairs
    (416) 628-5938
    (416) 360-0550 (FAX)
    dconstable@fnxmining.com