Operations - - DMC Mining Services

FNX acquired DMC Mining Services (“DMC”) in October 2007. DMC originated from Dynatec Corporation (“Dynatec”), a mining contracting company founded in 1980. Dynatec was the original partner in the FNX-Dynatec Sudbury Basin Joint Venture starting in 2002.

DMC operates out of its main office in Richmond Hill, Ontario. The U.S. business operates from Salt Lake City, Utah. There are field offices and shops in Sudbury, Ontario and near Elko, Nevada.

The DMC strategy going forward is to continue to operate the mining services business as well as pursue equity or joint venture opportunities in near production projects or operating mines.

W.M. (Bill) Shaver was appointed President of DMC Mining Services in October 2008. Bill is also Chief Operating Officer for FNX. He is one of the original Dynatec founders.

2008 Results

DMC generated revenue of $133.7 million in 2008 and had operating income of $13.3 million. With the severe downturn in metal prices in the fourth quarter, DMC was required to write off a receivable of $4.4 million when a client closed their mine and later sought bankruptcy protection. Several other mining operations were closed which also impacted DMC. In the second half of 2008, FNX also wrote off the last $6.6 million amortization of intangible assets from the purchase of DMC as the asset did not pass the impairment test. In 2008, DMC spent $6.5 million on capital expenditures, principally on underground trackless equipment for new projects. Depreciation was $8.7 million. This performance resulted in a net operating loss of $18.1 million and a net negative cash flow of $1.5 million for 2008.

Many projects were completed in the course of 2008, resulting in a very small backlog of confirmed contract work going into 2009. As a result, DMC made the decision to reduce staff late in 2008 to levels more appropriate to the current business environment, while maintaining a critical mass of skills to support bidding for and implementing new work contracts. This resulted in a 74% reduction from 1,033 employees at the end of 2007 to 271 total employees at year end 2008.