Quadra FNX Mining announces earnings of $168 Million in the first quarter of 2011
Quadra FNX Mining Ltd. (the “Company” or “Quadra FNX”) (TSX:QUX) has released its first quarter 2011 financial and operational results. The Company recorded first quarter earnings of $168 million or $0.88 per share (basic) compared to earnings of $55 million or $0.55 per share for the previous year. The higher earnings in the current quarter were driven by a $134 million pre-tax gain on the disposition of Gold Wheaton shares, higher average copper prices and the inclusion of the Sudbury operations following the merger with FNX. These factors were partially offset by lower sales volumes at Robinson and Carlota. Adjusted earnings for the first quarter totalled $51.8 million or $0.27 per share (basic) compared to $55.3 million or $0.56 per share (basic) for the previous year. Unusual items included a gain related to the sale of Gold Wheaton shares, a loss on derivatives, a gain on marketable securities and a leach pad inventory write down. The Company’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”).
|Operating and Financial Summary|
|In millions of US dollars (except per share data and production data)||March 31, 2011||March 31, 2010|
|Adjusted earnings (1)||51.8||55.3|
|Adjusted earnings per share (basic)||$||0.27||$||0.56|
|EBITDA per share (basic)||$||1.28||$||0.79|
|Earnings for the period||167.7||55.0|
|Basic earnings per share||$||0.88||$||0.55|
|Diluted earnings per share||$||0.85||$||0.54|
- Adjusted earnings is a non-IFRS financial measure and consists of net earnings with adjustments made to exclude derivative losses, gain on marketable securities and investments, merger costs, inventory write down and tax related items.
- EBITDA is a non-IFRS financial measure which is defined as earnings attributable to shareholders before interest expenses, income taxes, depreciation, amortization and depletion.
- Revenues and earnings from the former FNX operations are reported only for the period commencing May 21, 2010 (the day after the closing of the merger with FNX Mining Ltd.).
FIRST QUARTER AND RECENT HIGHLIGHTS:
- Payable production for the quarter totalled 46 million pounds of copper, 25 thousand ounces of total precious metals (TPMs) and two million pounds of nickel. Average cash costs were $2.19 per pound of copper.
- Total revenues increased 36% to $269 million in the quarter compared to $198 million in the same period of 2010.
- Earnings increased 205% to $168 million compared to $55 million in the same period of 2010.
- The ramp up of mining at Morrison continued with payable production increasing to eight million pounds of copper, six thousand ounces of TPMs and two million pounds of nickel at a net negative cash cost of $0.33/lb of payable copper.
- The Company received total proceeds of $295 million from the sale of its Gold Wheaton shares and recorded a pre-tax gain of $134 million. Quadra FNX ended the quarter with $577 million of cash.
- An NI 43-101 compliant inferred resource for the Victoria project was completed, totalling 12.5 million tonnes grading 2.3% Cu, 2.2% Ni, and 8.5 g/t TPMs or approximately 3.4 billion pounds of contained copper equivalent*. (See Press Release dated April 19th , 2011)
- A draft of the internal Sierra Gorda Financing Study was completed, establishing the development parameters for the project, and an NI 43-101 compliant Feasibility Study is expected to be completed in the second quarter.
* Cu Equivalent calculation assumes three-month trailing commodity prices; Cu at US$4.34/lb, Ni at US$12.27/lb, Pt at US$1784/oz, Pd at US$778/oz & Au at US$1426/oz.
At Robinson, first quarter production continued to be impacted by lower grades. Going forward, the benefits of a new, secondary access ramp and the completion of the mud removal from the bottom of the pit will, provide much greater operating flexibility and access to expected higher grades. These measures collectively are expected to lead to higher production in the second half of the year and overall production from Robinson is on track for 105 to 120 million pounds of copper.
The ramp up at Morrison continued as scheduled and combined copper production from all the Sudbury operations was slightly better than plan. At Franke, Quadra FNX took over mining operations and acquired much of the contractor’s mining fleet. Copper production at Franke is expected to ramp up in the second half of the year benefiting from the transition to owner mining, the commissioning of the new stacking equipment and the measures taken to improve recoveries.. At Carlota, while initial results from the transition to conveyor stacking have been positive, copper production for the year is now expected to be in the 20 to 30 million pound range, approximately 5 to 10 million pounds below previous expectations.
Paul Blythe, President and CEO of Quadra FNX comments, “Our strong financial results continue to be driven by a favourable copper price environment as well as increased copper production resulting from our expanded asset base. In the quarter we completed the sale of our Gold Wheaton shares for cash proceeds of $295 million and we have subsequently entered into a customary support agreement with respect to our equity holding in Far West Mining Ltd, from which we could potentially realize a pre-tax gain of approximately C$60 million.”
“Our underground operations remain on track and we continue to make progress at our open pit mines with the expectation of a stronger second half of the year. During this quarter, we continued to focus on completing the internal Sierra Gorda Financing Study and advanced our partnership and financing discussions. We are still driving towards having a partnership and financing structure in place by mid-2011 allowing us to commence construction and achieve production in 2014.”
Paul Blythe concludes; “We also recently announced an inferred resource estimate for our Victoria project which has established this deposit as one of the most significant discoveries made in the Sudbury district in the past 40 years. Given the significance of this deposit, Quadra FNX is targeting the commencement of shaft sinking in 2012, with first production in 2017. Along with Sierra Gorda in Chile, Quadra FNX now has two long-life, low-cost development projects in mining friendly jurisdictions that will shape the future of our Company.”