FNX Mining Suspends Contact Nickel Production at Its Levack Mineadmin
FNX Mining Company Inc. announced that, due to low commodity prices and low provisional metal accountabilities along with high operating costs at its Levack nickel contact deposits, the Company has suspended “commercial” production from that part of its Levack Complex.
However, mining from the Levack nickel deposits will continue during the fourth quarter to produce about 35,000 tons of “metallurgical test” production. The tons extracted will be stockpiled until a critical volume is achieved at which time it will be shipped to the Company’s custom processor for batch processing. This batch test, along with other ongoing metallurgical test work, will help finalize metal accountabilities for the Levack nickel contact deposits.
Pending commodity prices and final metal accountabilities, a decision will be made at year end whether to continue the suspension, put the Levack nickel contact deposits on long-term care and maintenance or to re-activate “commercial” production from this part of the Levack Complex.
The suspension of production being announced today is not expected to result in employee layoffs or a reduction in FNX’s Sudbury operation’s workforce. Affected employees will be relocated to the McCreedy West Mine, Rob’s Deposit, Podolsky Mine or development work on the Levack Footwall Deposit.
The Levack nickel contact deposits do not contain or produce any precious metals and the suspension of production from these deposits will not affect FNX’s precious metal production and its agreements with Gold Wheaton Gold Corp.
The Levack Complex consists of: (1) Levack nickel contact deposits, (2) Rob’s transitional copper-nickel-precious metal deposit, (3) Levack Footwall high-grade copper-nickel-precious metal deposit, (4) McCreedy West nickel contact deposits and (5) McCreedy West PM copper-precious metals deposit. At Q-3 2008 commodity prices and current metal accountabilities, production from the Company’s Podolsky Mine and the Levack Complex, except for the Levack nickel contact deposits, remains profitable and will continue as planned for the remainder of 2008. However, the suspension in production announced today, along with operational changes during the third quarter, will result in a reduction in forecast production of tons and payable metal for 2008. The Company now expects to produce about 1.3 million tons of ore yielding payable metal of approximately 13.5 million pounds of nickel, 38.0 million pounds of copper and 56,000 ounces of total precious metals. The tons and payable metal produced from the Levack metallurgical batch test and the Q-1 2008 bulk sample from the Levack Footwall Deposit are not included in the new forecast.
Due to the Company’s strong balance sheet, zero debt and its ability to quickly and economically increase, decrease or suspend its production levels, FNX believes it is uniquely placed to weather the current economic downturn. The Company will endeavour to maximize profitability by concentrating on its highest margin and most profitable deposits. In addition, the ongoing development programs at the Levack Footwall Deposit, Rob’s Deposit and the Podolsky Mine will continue to be aggressively advanced.
The Company will continue to closely monitor economic and operational conditions and will quickly take appropriate actions in the best interest of the Company and its employees and shareholders.