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Quadra FNX Mining Ltd. ("Quadra
FNX" or the "Company") (TSX:QUX - News) is pleased to announce
the 2010 fourth quarter and annual production results from its 100% owned
mines in the United States, Canada and Chile. Combined production the
year-ending December 31, 2010 totaled 224 million pounds of copper, 7 million
pounds of nickel and 148 thousand ounces of total precious metals
("TPMs") of which 57 million pounds of copper, 2 million pound of
nickel and 39 thousand ounces of TPMs were produced in the fourth quarter.
2010 annual and quarterly production:
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Production Q1 Q2 Q3 Q4 2010
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Copper (Million lbs)
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Robinson(1) 32 24 27 27 109
Carlota(2) 8 7 7 7 29
Franke(2) 9 10 10 8 37
Podolsky(3) 3 9 5 8 25
Morrison(3) 2 4 6 7 19
Levack Complex excluding Morrison(3) 1 1 1 1 5
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Total 55 55 57 57 224
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TPM (kozs)
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Robinson(1) 27 15 15 16 73
Podolsky(3) 5 12 5 11 33
Morrison(3) 1 2 3 4 10
Levack Complex excluding Morrison(3) 8 8 8 8 32
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Total 41 37 32 39 148
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Total Nickel (Million lbs)(3) 1 2 2 2 7
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Note: The table above includes all the historical periods, including the
period prior to the merger of Quadra Mining Ltd. and FNX Mining Company Inc.
to form Quadra FNX Mining Ltd. on May 20, 2010. The table also includes pre-
production ore from the Morrison deposit.
(1) Produced in concentrate
(2) Produced in cathode
(3) Shipped payable metal
The table below highlights the payable
metal sales volumes, including the period prior to the merger of Quadra and
FNX on May 20, 2010, but excludes sales from the Morrison deposit prior to
commercial production. Annual metal sales totaled 220 million pounds of
copper, 5 million pounds of nickel and 146 thousand ounces of payable TPMs of
which 59 million pounds of payable copper, 2 million pounds of nickel and
36thousand ounces of payable TPMs were sold in the fourth quarter.
2010 annual and quarterly metal sales volumes:
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Sales Q1 Q2 Q3 Q4 2010
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Copper (Million lbs)
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Robinson(1) 28 27 29 25 108
Carlota(2) 10 8 7 8 32
Franke(2) 10 8 13 10 41
Podolsky(3) 3 9 5 8 25
Morrison(3) 0 0 2 7 10
Levack Complex excluding Morrison(3) 1 1 1 1 5
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Total 52 52 57 59 220
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Copper price at beginning of period
($US/lb)(4) $3.34 $3.56 $2.96 $3.65 $3.34
Copper price at end of period ($US/lb)(4) $3.56 $2.96 $3.65 $4.40 $4.40
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TPM (kozs)
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Robinson(1) 24 20 19 13 75
Podolsky(3) 5 12 5 11 33
Morrison(3) 0 0 1 4 6
Levack Complex excluding Morrison(3) 8 8 8 8 32
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Total 37 40 34 36 146
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Total Nickel (Million lbs)(3) 1 1 1 2 5
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Note: The table above includes sales from the period prior to the merger of
Quadra and FNX on May 20, 2010. The table excludes sales from the Morrison
deposit prior to commercial production since revenue therefrom was offset
against capital expenditures.
(1) Sold in concentrate
(2) Sold in cathode
(3) Sold payable metal
(4) The average price used to value provisionally priced copper
US OPERATIONS:
Robinson
At Robinson, production for the year
totaled 109 million pounds of copper and 73 thousand ounces of gold in
concentrate. During the fourth quarter the mine completed the transition from
the Veteran Pit to the Ruth Pit. Production in the fourth quarter was
slightly below plan due to severe weather and grade variability and totaled
27 million pounds of copper.
Carlota
Copper production for the year totaled
29 million pounds of cathode. There was no change in percolation rates in the
quarter. However, an unusually heavy rainfall in December, specifically 3
inches in 24 hours, while less severe than the January 2010 event, had some
impact on plant performance.
CANADIAN OPERATIONS:
Production from the Canadian operations
totaled 49 million payable pounds of copper, 7 million pounds of nickel and
75 thousand ounces of TPMs. Production from the Morrison deposit continued to
increase during the fourth quarter and the orebody contributed 19 million
pounds of payable copper for the year. McCreedy West contributed 5 million
pound of payable copper and 32 thousand ounces of TPMs. Plans for mining of
Contact Nickel ore from McCreedy West have not progressed. In the fourth
quarter Podolsky fully recovered from the ground control issues experienced
in the third quarter and contributed 25 million pounds of payable copper and
33 thousand ounces of TPMs for the year.
CHILEAN OPERATIONS:
Franke
Copper production for the year totaled
37 million pounds of cathode and 8 million pounds for the quarter, production
in the quarter being impacted by a failure of the secondary crusher in late
November and into early December. Optimization of leaching operations
continued although consistency in pad recoveries has yet to be fully
realized. Further testing is ongoing.
2011 GUIDANCE:
For the 2011 fiscal year Quadra FNX
expects consolidated copper production of 240 million pounds +/- 10% of
payable copper, plus approximately 115 thousand ounces of payable TPMs and
approximately 7 million pounds of payable nickel. The table below outlines a
guidance range for each of the operations, with further discussion below.
2011 Production Guidance:
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Payable Copper (Mlbs)
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Low High
Robinson 105 120
Morrison 30 40
Franke 35 45
Carlota 30 35
Podolsky 18 21
Levack Complex excluding Morrison 5 6
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US OPERATIONS:
Robinson
The company expects 2011 payable copper
production to range between 105 and 120 million pounds, while gold production
is expected to decline to approximately 45-50 thousand payable ounces due to
lower gold grades at Ruth. The contribution of molybdenum, however, is
expected to increase. Key factors to achieving the upper end of the 2011
range are sustaining throughput at 44ktpd and no unexpected adverse events.
Note that from 2011 onwards, Robinson's production and guidance will be
reported as payable metal rather than as metal in concentrate.
Carlota
In 2010, Quadra FNX established that the
high levels of fines identified in the Carlota orebody have resulted in a
reduced percolation rate, and a broad range of studies to resolve the issue
have been ongoing. Conclusions that have emerged from this work are that
agglomeration, fines removal and blending are not viable options. However,
test work has shown that conveyor stacking in place of direct truck dumping
substantially improves percolation rates. Conveyor stacking using a
contractor will be used indefinitely from the second quarter onwards to firm
up this concept.
As previously disclosed, the Company
currently has a significant amount of recoverable copper stacked on the
Carlota leach pads. The existence of fines is affecting the recovery of
copper from these pads and studies have also been ongoing to determine the
best way to deal with this issue.
CANADIAN OPERATIONS:
Morrison
At Morrison, the Company continues to
advance the rehabilitation of the #2 Shaft, as well as the 3600 level loading
pocket and related infrastructure. Additional haul truck capacity is expected
to allow continued improvement in the ore production rate until the #2 Shaft
is fully serviceable at the end of 2011.
Development of the Morrison deposit
remains on track with production expected to continue to increase through
2011 and into 2012 and the Company expects 2011 production from Morrison to
range between 30 and 40 million pounds of payable copper, approximately 20-25
thousand ounces of payable TPMs and approximately 5 million pounds of payable
nickel. Quadra FNX's ability to attain the upper end of the production range
is mainly dependent on maximizing utilization of the internal ramp system and
the successful commissioning of the backfill system. Completion of the shaft
rehabilitation is expected to allow the production rate to be increased to
over 45million payable pounds of copper.
Podolsky
Quadra FNX expect 2011 production from
Podolsky to range between 18 and 21 million pounds of payable copper and
approximately 20-25 thousand ounces of payable TPMs and about 1 million
pounds of payable nickel. In 2011 increased focus will also be placed on
exploration with the aim of improving the reserve base.
Other Sudbury Operations
Quadra FNX currently expect 2011
production at McCreedy West mine to be limited to the copper-rich footwall
zones to be approximately 5-6 million pounds of payable copper plus
approximately 25-30 thousand ounces of payable TPMs and approximately 1
million pounds of payable nickel. Contact Nickel ore mining plans currently
remain on hold.
CHILEAN OPERATIONS:
Franke
As previously disclosed, the Company has
been adjusting the leach operating parameters including, changing the crush
size, reducing the lift height, increasing the leach pad area, and increasing
solution application rates in an effort to improve recoveries. These changes
have proven beneficial and will continue along with other optimizations, but
steady-state recovery levels are yet to be achieved.
The new stacker, which was delivered in
November had a significant structural design defect which is being addressed.
The operation is confident that it can sustain its throughput objectives with
its existing equipment on an interim basis. Based on the current throughput
and recoveries Quadra FNX expects 2011 production from Franke would total
approximately 35 pounds of copper cathode while further improvements to
stacking volumes and recoveries could increase copper production to the 45
million pound range. A portion of our employees at Franke have recently
formed a union, and first contract negotiations are ongoing.
2011 Operating Costs
With the exception of Robinson and
Morrison, onsite plus offsite costs in 2011 are expected to remain in line
with those of 2010. Operating costs are expected to be higher at Robinson
mainly as a result of the higher expense related to the removal of mud from
the bottom of the Ruth Pit, which is expected to contribute an additional
$15-$20 million costs in the first half of 2011. As a result of higher volume
of material mined, operating costs are also expected to increase at Morrison.
Assuming the Company's production range and current input assumptions, 2011
onsite plus offsite costs are Morrison are expected to be in the $70 to $80 million
range.
2011 Capital Expenditure Guidance
Capital expenditures for the year are
expected to be approximately $140 million which includes approximately $50
million for development of the Morrison deposit. Not included in this are
expenditures on Victoria or Sierra Gorda.
Paul Blythe, President & CEO
comments; "2011 will be the first year of full operation of Quadra FNX
as a consolidated company. We enter the year with a strong cash position,
following the sale of our Gold Wheaton shares. Our focus in 2011 will be on
continuous improvement of the performance of our open pit operations as well
as increasing output at our low-cost Morrison deposit. While we continue to
make progress on resolving the issues at our heap-leach open pit operations
including Carlota, these are learn-and-adapt developments. We will also
continue to drive forward on our Victoria discovery, which will remains a key
option for improving our production profile and longevity in the Sudbury
Basin. We are currently in the process of completing the internal Financing
Study for Sierra Gorda, on track for the end of the first quarter of 2011. In
conjunction with this, partnership discussions are ongoing and progressing
well."
The 2010 fourth quarter financial
results will be announced prior to market open on Monday, February 28th,
2011. Dial in details of the accompanying conference call will be issued
under separate press release.
About Quadra FNX Mining Ltd. (TSX:QUX - News)
Quadra FNX Mining Ltd. is a leading
mid-tier copper mining company with corporate offices in Vancouver, B.C. and
Toronto, Ontario. Quadra FNX produces copper and platinum group metals from
its operating mines: Robinson in Nevada, Carlota in Arizona, Franke in
northern Chile, and McCreedy West, Levack, which includes Morrison, and
Podolsky in Sudbury, Ontario. The Company possesses several advanced
development projects, including the Sierra Gorda copper-molybdenum project in
Chile, the Malmbjerg molybdenum development project in Greenland and the
Victoria project, an advanced exploration project in Sudbury. Quadra FNX
employs approximately 1,650 people in North and South America.
FORWARD-LOOKING INFORMATION
This Press Release contains
"forward-looking information" that is based on Quadra FNX's
expectations, estimates and projections as of the dates as of which those
statements were made. This forward-looking information includes, among other
things, statements with respect to the Company's business strategy, plans,
outlook, financing plans, long-term growth in cash flow, earnings per share
and shareholder value, projections, targets and expectations as to reserves,
resources, results of exploration (including targets) and related expenses,
property acquisitions, mine development, mine operations, mine production
costs, drilling activity, sampling and other data, estimating grade levels,
future recovery levels, future production levels, capital costs, costs
savings, cash and total costs of production of copper, gold and other
minerals, expenditures for environmental matters, projected life of Quadra
FNX's mines, reclamation and other post closure obligations and estimated
future expenditures for those matters, completion dates for the various
development stages of mines, availability of water for milling and mining,
future copper, gold, molybdenum and other mineral prices (including the
long-term estimated prices used in calculating Quadra FNX's mineral
reserves), end-use demand for copper, currency exchange rates, debt
reductions, use of future tax assets, timing of expected sales and final
pricing of concentrate sales, the percentage of anticipated production
covered by option contracts or agreements, anticipated outcome of litigation
and anticipated impact of converting to IFRS. Generally, this forward-looking
information can be identified by the use of forward-looking terminology such
as "outlook", "anticipate", "project",
"target", "believe", "estimate",
"expect", "intend", "should",
"scheduled", "will", "plan" and similar
expressions. Forward-looking information is subject to known and unknown
risks, uncertainties and other factors that may cause Quadra FNX's actual
results, level of activity, performance or achievements to be materially
different from those expressed or implied by such forward-looking
information, and developed based on assumptions about such risks,
uncertainties and other factors set out herein, including but not limited to:
-- risks associated with the mineralogy and block model assumptions at all
mines and projects including, in particular the complex Robinson mine;
-- uncertainties related to the extent to which historical mining
activities at Robinson have removed mineral material expected to be
present;
-- uncertainties related to the impact of the recent storm event at the
Carlota Mine and uncertainty relating to the leaching rate achieved at
Carlota;
-- risks related to maintaining current operating parameters at Podolsky;
-- uncertainties related to actual capital costs, operating costs,
production schedules and economic returns associated with the ramp-up of
the Morrison deposit;
-- risks associated with Quadra FNX's off-take agreement with Vale Inco,
including the risk of potential adjustment to final payable metal and
processing cost terms;
-- uncertainties relating to availability of updated equipment for Franke
and the leach recovery rate achieved at Franke;
-- uncertainties related to the construction quality and structural design
at Franke;
-- risks relating to the performance of the mining contractor at Franke;
-- risks associated with the development of the Sierra Gorda project, a
large project with significant capital expenditure, permitting and
infrastructure requirements;
-- risks relating to the preliminary nature of the testwork underlying the
scoping study described in the Sierra Gorda Technical Report;
-- risks associating with ongoing litigation at Sierra Gorda and with
potential future litigation at Sierra Gorda and other projects;
-- risks relating to Quadra FNX's ability to find a suitable partner or
obtain project financing for Sierra Gorda;
-- uncertainties related to the amount of funding required to achieve full
production levels at Franke and Carlota and at the Morrison deposit;
-- uncertainties related to Quadra FNX's ability to expand or replace
depleted reserves;
-- uncertainties related to the possible recalculation or reduction of the
Company's mineral reserves and resources;
-- risks that Quadra FNX's title to its property could be challenged,
including potential challenges from First Nations with respect to the
Sudbury operations;
-- risks associated with Quadra FNX's dependence on transportation
facilities and infrastructure;
-- risk associated with labour relations;
-- risks related to Quadra FNX's shareholder rights plan;
-- risk related to derivative contracts and exposure to the credit risk of
counterparties;
-- risks associated with taxation;
-- conflicts of interest;
-- risks associated with fluctuations in costs of operating supplies and
other inputs;
-- uncertainties related to actual capital costs, operating costs and
expenditures, production schedules and economic returns from the
Company's mining projects;
-- inherent hazards and risks associated with mining operations;
-- inherent uncertainties associated with mineral exploration;
-- risks associated with Quadra FNX being subject to government regulation,
including changes in regulation;
-- risks associated with Quadra FNX being subject to extensive
environmental laws and regulations, including change in regulation;
-- risks associated with Quadra FNX's need for governmental license and
permits;
-- political and country risk;
-- Quadra FNX's need to attract and retain qualified personnel;
-- risks related to the need for reclamation activities on Quadra FNX's
properties, including the nature of reclamation required and uncertainty
of costs estimates related thereto;
-- risk of water shortages and risks associated with competition for water;
-- increases in off-site transportation and concentrate processing costs;
-- risks related to the stability of mine pit walls;
-- uncertainties related to fluctuations in copper and other metal prices;
-- uncertainties related to the current global financial conditions; and
-- uncertainties related to fluctuation in foreign currency exchange rates.
A discussion of these and other factors
that may affect Quadra FNX's actual results, performance, achievements or
financial position is contained in the filings by Quadra FNX with the
Canadian provincial securities regulatory authorities, including Quadra FNX's
Annual Information Form and the Annual Information Form filed by FNX prior to
the merger between Quadra and FNX. Forward-looking statements are based on
assumptions management believes to be reasonable, including but not limited
to the continued operation of Quadra FNX's mining operations, no material
adverse change in the market price of commodities, that the mining operations
will operate in accordance with Quadra FNX's public statements and achieve
its stated production outcomes, and such other assumptions and factors as set
out herein. Although Quadra FNX has attempted to identify important factors
that could cause actual results to differ materially from those contained in
forward-looking statements, there may be other factors that cause results not
to be as anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate. Accordingly, readers
should not place undue reliance on forward-looking statements. Quadra FNX
disclaims any intent or obligations to update or revise publicly any
forward-looking statements whether as a result of new information, estimates
or options, future events or results or otherwise, unless required to do so
by law.
Contact:
Quadra FNX Mining Ltd.
Media and Investor Relations Contact:
Derek White
Executive Vice President, Corporate Development
604-807-7555
Nawojka Wachowiak
Quadra FNX Mining Ltd.
Vice President, Investor Relations
416-642-9209 |
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