FNX sees record production in third quarter

FNX Mining (FNX-T) produced and sold more nickel, copper and precious metals during the third quarter than in any previous quarter in its entire history.

But a strong Canadian dollar and lower quarterly realized nickel prices dampened those results.

The third quarter production results were the best in the companys history and we continued to maintain low cash operating costs, John Lill, FNXs president and chief executive, said in a prepared statement.

The companys overall financial results, however, were impacted by significantly lower quarterly nickel prices and a very strong Canadian dollar, he said. We continue to be on track to meet or somewhat exceed our 2007 production targets.

FNX sold a total of 248,272 tons of ore in the third quarter compared with 165,306 tons in the same quarter last year. That brings the total for the year to Sept. 30 to 687,815 tons of ore, up fom 466,784 tons in the same period in 2006.

FNX reported net earnings of C$12.5 million(C$0.15 per share) for the third quarter from its operations on revenues of C$56.8 million. That compares with net earnings of C$20.5 million (C$0.24 per share) in the third quarter of 2006 from revenues of C$53 million.

Net earnings for the year to Sept. 30 totaled C$77.7 million (C$0.93 per share) from revenues of C$216.4 million, compared with net earnings of C$49 million (C$0.59 per share) on revenues of C$119.7 million during the same period in 2006.

The averaged realized price per pound of nickel and copper during the third quarter was US$11.65 and US$3.57, respectively, compared to US$14.20 and US$3.60 respectively for the third quarter of 2006.

The cash costs to produce a pound of nickel, net of by-product credits, for the third quarter reached US$2.39, compared to US$(0.07) in the third quarter of 2006. For the year to Sept. 30, those figures were US$2.78 compared with US$0.51 for the same period last year.

FNX said the higher cash cost to produce a pound of nickel, net of by-product credits, was the result of increased nickel production from the ramp up of its Levack mine. It was also due to a lower proportion of by-product revenues to operating costs with both the McCreedy West and Levack mines now in operation.

Meanwhile the company reported that record capital expenditures of C$55.4 million during the quarter were largely spent on the ramp-up of the Levack mine to a planned daily rate of 1,500 tons, and the development of its Podolsky mine.

Exploration in the Sudbury basin also pushed ahead in the third quarter. The 60 km by 30 km elliptical basin just north of Sudbury is believed to have formed after a giant meteorite crashed to earth roughly 1.85 billion years ago. The original crater was more than 150 km in diameter.

During the third quarter, FNX drilled a total of 24,014 metres in 68 surface and underground holes in the Sudbury area. The drilling concentrated on searching for nickel-rich contact deposits at the McCreedy West mine, down-dip and up-dip of the Inter Main deposit and down-dip of the East Main deposit.

The latter was drilled from the 2000 level of Xstrata Nickels (XSRAF-O, XTA-L) Craig mine. In December 2006, FNX reached an underground development and advanced exploration agreement with Xstrata under which Xstrata would drive an exploration drift from its Craig mine property into FNXs adjoining Levack Footwall deposit at the Levack mine.

Accessing the Levack Footwall deposit quickly from underground has been one of FNXs priorities since the deposit was discovered in February 2005.