BASE METALS

FNX reports Cdn$389m loss in '08 after nickel ops cutbacks and deferrals

Despite suspending Sudbury nickel production, FNX Mining expects to produce 3.7 million pounds of nickel, 35.2 million pounds of copper and 58,000 ounces of platinum, palladium and gold this year.

Author: Dorothy Kosich
Posted: Tuesday , 31 Mar 2009

RENO, NV - 

Despite suspending all nickel production, decreasing capex by Cdn$70 million, and laying off 300 employees, Toronto's FNX Mining, nevertheless reported a Cdn$389 million net loss for 2008.

Terry MacGibbon, FNX Mining CEO said, the company was "dramatically impacted by the rapid commodity price decline and economic downturn in 2008." However, taking those actions resulted in a non-cash asset impairment pre-tax write down of $509.8 million.

"Although considered impaired at long term commodity prices, our former producing deposits are on stand-by and could, at higher commodity prices, be quickly put back into production and have significant value," he added.

MacGibbon said FNX's challenges this are "to control costs and concentrate on our deposits which are cash positive or at least cash neutral, even at current low commodity prices. We will continue to focus on achieving the planned 2010 start up of the high grade Levack Footwall Deposit thereby positioning the company for success when the economy improves and we see higher commodity prices."

Late last year, FNX suspended all nickel mining from the Levack Complex and reduced Sudbury and head office staff and hourly employees by approximately 300 people. "The nickel contact deposits do not contain any payable metals, therefore the suspension of nickel production does not affect FNX's precious metal production and its agreement with Gold Wheaton.

The company's payable metal forecast for this year includes 3.7 million pounds of nickel, 35.2 million pounds of copper and 58,000 ounces of platinum, palladium and gold. FNX said all operations will be closely monitored this year for economic viability to the company. 

"The Sudbury operations will be re-evaluated regularly during the year to further reduce or re-start suspended operations in response to future metal price trends." FNX's Sudbury operations include McCreedy West and Levack mines. These Sudbury mines have nickel-copper and copper-nickel -precious metals deposits, often within the same mine.

During a conference call with analysts Monday, FNX officials said their company is "essentially in a survival mode," which includes not looking for new deposit this year. FNX has reduced its capex budget from Cdn$237 million last year to $64 million in 2009.

Nonetheless, the company intends to focus its $10.2 million exploration program on development of the Levack Footwall Deposit with pre-production ore anticipated late this year with a production ramp up in 2010, as well as the Rob Deposit.

For 2008, FNX reported a net loss of Cdn$388.54 million or negative $4.59 per share, compared to a net profit of $110 million of $1.31/sh in 2007. For the fourth-quarter 2008 the company reported a net loss of $397.4 million or negative $4.68/sh compared to a net profit of $32.28 million or 38-cents per share for the same quarter of 2007.

 

Metatags: FNX Mining financials, Sudbury nickel mining shutdowns, FNX Mining CEO Terry MacGibbon