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NewsFlash10 on Aug 04, 2005 9:35am
FNX earns $3.09 million in Q2
FNX Mining earns $3.09-million in Q2
FNX Mining Company Inc (TSX:FNX)
Shares Issued 55,240,972
Last Close 8/3/2005 $12.25
Thursday August 04 2005 - News Release
Mr. Terry MacGibbon reports
FNX MINING REPORTS STRONGER OPERATING AND FINANCIAL RESULTS FOR THE SECOND QUARTER
FNX Mining Company Inc. has provided financial and operating results for the three months ending June 30, 2005.
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 per cent higher than in the second quarter of 2004 and 45 per cent higher than in the first quarter of 2005. Net earnings were $3.1-million, or six cents per share for this quarter, compared with net earnings of $200,000, or nil per share, in the second quarter of 2004, and $700,000, or one cent per share, in the first quarter of 2005. Cash flow from operating activities was $3.6-million, equal to seven cents per share, compared with $1.1-million, or two cents per share, in the same period in 2004.
For the first six months of 2005 operating revenues totalled $37.0-million, approximately 60 per cent higher than the comparable period in 2004. Net earnings for the year to date were $3.8-million, or eight cents per share, or an increase of 157 per cent from the $1.5-million, or three cents per share, in the first six months of 2004. Cash flow from operating activities was $9.0-million, or 18 cents per share, for the first half of 2005, compared with $2.3-million, or five cents per share, in the first half of 2004.
CONSOLIDATED FINANCIAL RESULTS
Three months ended June 30
(in thousands of dollars)
2005 2004
Revenue $ 21,923 $ 13,624
Earnings $ 3,094 $ 178
Earnings per share $ 0.06 $ 0.00
CONSOLIDATED FINANCIAL RESULTS
Six months ended June 30
(in thousands of dollars)
2005 2004
Revenue $ 37,007 $ 23,135
Earnings $ 3,822 $ 1,489
Earnings per share $ 0.08 $ 0.03
Note: The company accounts for the Sudbury joint venture operations on a 100-per-cent consolidated basis, although its ownership interest is 75 per cent of the Sudbury joint venture. The remaining 25-per-cent ownership interest in the revenue, expenses, assets and liabilities of the Sudbury joint venture 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-million less than Dec. 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 Dec. 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 three U.S. cents per pound of nickel sold, net of byproduct 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 with 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 with $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 $7.21 (U.S.) per pound and for the first half of 2005 it was $7.07 (U.S.) per pound. These prices compare with $5.64 (U.S.) per pound and $6.02 (U.S.) per pound, respectively, in 2004. The average realized copper price during the second quarter was $1.48 (U.S.) per pound and $1.46 (U.S.) per pound for the first half of the year. This compares with $1.23 (U.S.) per pound and $1.21 (U.S.) per pound 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 April 30
2005 2004
Operating statistics
(100% level)
Ore mined (tons) 93,586 73,521
Ore sold (tons) 92,108 75,980
Ni ore sold (tons) 86,349 72,044
Ni ore grade
(% nickel) 1.7 1.6
Cu ore sold (tons) 5,759 3,936
Cu ore grade
(% copper) 8.9 5.9
Payable nickel
(000s lbs.) 2,100 1,556
Payable copper
(000s lbs.) 1,324 669
PRODUCTION
Six months ended April 30
2005 2004
Operating statistics
(100% level)
Ore mined (tons) 168,610 115,619
Ore sold (tons) 166,328 115,519
Ni ore sold (tons) 156,164 108,769
Ni ore grade
(% nickel) 1.6 1.7
Cu ore sold (tons) 10,164 6,750
Cu ore grade
(% copper) 8.1 6.3
Payable nickel
(000s lbs.) 3,628 2,509
Payable copper
(000s lbs.) 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 per cent nickel and 5,759 tons of copper ore grading 8.9 per cent copper. This compares with 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 totalled 168,610 tons. Sold ore for the first six months was composed of 156,164 tons of nickel ore grading 1.6 per cent nickel and 10,164 tons of copper ore averaging 8.1 per cent copper.
Development
Development and preproduction activities at the PM deposit continued through the second quarter and have advanced 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. Preproduction revenues from ore mined up to and including April 30, 2005, totalled $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 No. 1 and No. 2, while the No. 3 compartment was reconditioned to the 1,800-foot level. All levels have been inspected to the targeted 2,200-foot 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 feet by the end of the second quarter. By the end of July, the shaft was at a depth of 780 feet and is scheduled for completion at a depth of 2,450 feet early in 2006.
Exploration results
During the second quarter of 2005 FNX completed 70,631 feet of surface and underground drilling in 138 holes, while year-to-date drilling totalled 132,079 feet in 281 holes. Surface drilling during the quarter totalled 32,336 feet in 11 holes at the Levack footwall discovery and Podolsky and Kirkwood properties. Underground drilling consisted of 38,295 feet 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. was $2.5-million. Approximately $500,000 of the budget was expended prior to the acquisition of Aurora by FNX and Dynatec Corp. 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-per-cent 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 per cent of Aurora sold to Dynatec was deemed to result in a one-time, pretax, 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, Aug. 4, 2005, at 4:15 p.m. 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, Aug. 12, 2005, at: 416-695-5800 or 1-800-408-3053, access code 3159979 (followed by pound key)