FNX, Dynatec soar on Levack results (May 19, 2005)

The latest round of drilling on the recent Footwall discovery behind the Levack no.2 mine shaft, 40 km north of Sudbury, Ont., has gone four-for-four for partners FNX Mining (FNX-T) and Dynatec (DY-T).

All four boreholes cut massive sulphide veins similar to the high-grade discovery in hole 6010 sunk in late February. That hole returned 3.1 metres (beginning 1,634 metres below surface) grading 26.2% copper, 3% nickel, plus 4.2 grams platinum, 9.8 grams palladium, and 0.5 gram gold per tonne. A 5-metre section lower in the hole yielded 26.2% copper, 3.7% nickel, plus 5.1 grams platinum, 10 grams palladium, and 0.4 gram gold.

More recently, hole 6045, collared around 69 metres to the southwest encountered two large massive sulphide veins. The first runs 10.6% copper, 3.6% nickel, 3.7grams platinum, 7.9 grams palladium, and 0.6 gram gold over 8.6 metres, beginning 1,266 metres downhole. A second 12.3-metre interval (from 1,285 metres downhole) grades 22.5% copper, 3.8% nickel, 8.4 grams platinum, 18.7 grams palladium, and 1.3 grams gold.

The partners are also encouraged by two intersections of low-sulphidation mineralization lower in the hole, including 4.5 metres (from 1,401 metres) grading 3.4 grams palladium, 2.5 grams platinum, and 0.4 gram gold, with minor copper and nickel values.

The three remaining holes have extended the high-grade mineralization some 115 metres to the southwest of the discovery hole; all three intersected two massive sulphide veins. Drilling in the three holes will continue until they have tested the entire mineralized package or reached the drill’s depth capacity.

Hole 6045A cut 1.8 metres (from 1,277 metres) grading 24.8% copper, 4.3% nickel, 8.6 grams platinum, 18.3 grams palladium, and 11.1 grams gold. The hole also yielded 3.1 metres of 25.6% copper, 5.4% nickel, 12.8 grams palladium, 29 grams platinum, and 1.3 grams gold, beginning at a downhole depth of 1,320.5 metres.

Hole 6047 returned 3.3 metres (from 1,313.3 metres) containing 24.6% copper, 3% nickel, 5.7 grams platinum, 14.3 grams palladium, and 2.2 grams gold per tonne. A 4-metre interval beginning at a downhole depth of 1,326 metres contained 17.2% copper, 2.6% nickel, 4 grams platinum, 9.4 grams palladium, and 4.2 grams gold.

Assay results for hole 6046 are pending.

The new zone remains open in all directions; high grades and sharp-walled massive sulphide veins comprising chalcopyrite, cubanite, pentlandite and millerite characterize the mineralization.

Encouraged by the impressive results, FNX has added a fifth drill to continue testing the discovery from surface. An agreement with Falconbridge (FL-T) will also allow the zone to be tested via 300-to-460-metre-long holes drilled form an underground drift at the nearby Craig mine.

The Footwall discovery is associated with a UTEM-4 geophysical anomaly measuring 200 metres by 300 metres. Some of the proposed underground holes will be subject to UTEM-4 geophysical surveying to define future drill targets.

Levack is one of five formerly producing mining properties acquired by the Sudbury joint venture in 2003 from Inco (N-T). FNX owns 75% of the joint venture, with Dynatec (DY-T) holding the remaining 25%.

The latest drill results sent shares in FNX as much as $2.10, or 23%, higher to a new 52-week high of $11.25 in early trading in Toronto on May 19; Dynatec shares jumped as much as 25, or 23%, to $1.34 in extremely high traffic.

In other news, the pair furthered their partnership with a deal that will see Dynatec take an indirect half-interest in Aurora Platinum (ARP-V); FNX recently tabled plans to acquire Aurora via an all-stock deal valued at $39 million (T.N.M., May 13-19/05).

Dynatec can earn its stake by paying cash in an amount equal to a quarter of the value of the shares FNX issues to acquire Aurora, to a maximum of $12.1 million.

Dynatec must also issue FNX around 3.6 of its own shares for every two FNX shares issued under the Aurora transaction, or around 7.8 million shares. FNX will also receive 7.2273 Dynatec share purchase warrants for every two FNX options exchanged with Aurora. The Dynatec warrants will be exercisable at a price equal the price of the FNX options issued divided by 7.2273.

FNX’s friendly bid for Aurora needs the support of at least 66% of the votes cast at that company’s shareholders meeting on June 20.