The Podolsky Mine achieved commercial production on January 1, 2008. It is located on the northeast rim of the Sudbury Basin and hosts the copper-precious metal 2000 Deposit. Adjacent to the breccia portion of the 2000 Deposit is the gray gabbro-hosted mineralization, which appears to contain potentially viable mining areas yet to be fully delineated. Also hosted at the Podolsky Property is the separate copper-precious metal, North Deposit.
The Podolsky Mine shipped 243,239 tons of ore in 2008, increasing its average daily production rate from 260 tons in the first quarter to 600 tons in the second quarter to 900 tons in the third quarter and reaching its planned rate capacity of 1,000 tons per day in December 2008. The Company’s current 2009 plan forecasts production of 372,049 tons at Podolsky yielding 1.8 million pounds of payable nickel, 28.5 million pounds of payable copper and 27,300 ounces of payable platinum, palladium and gold.
The 2000 Deposit is being developed from a main access ramp with the principal sub-levels established at 75?ft vertical intervals (see Figure 2).
 |
| Figure 2: Podolsky Development and Mining Plan |
Initially, blast hole mining was utilized and backfilled with cemented rock fill. Secondary stopes are backfilled using unconsolidated waste rock. In 2009, the Company plans include 30,000 tons of narrow vein mining, where blast hole stoping is not applicable.
2009 Production Forecast
FNX’s 2009 production forecast is based on controlling operating costs and producing only from deposits which can potentially cover sustaining capital and possibly provide a positive contribution. FNX’s 2009 annual operating plan forecasts production of 679,000 tons of shipped ore yielding 3.7 million pounds of payable nickel, 35.2 million pounds of payable copper, and 58,000 ounces of payable platinum, palladium and gold. Table 2 summarizes the 2009 production forecast.
Budgeted capital expenditures (“capex”) in 2008 were $237.4 million. During the year, the capex budget was reduced to $186.6 million and further reduced later in the year to actual capex of approximately $168 million. The priorities for 2009 are to preserve cash, advance development of the LFD and complete initial development of the Podolsky Mine. These considerations resulted in a 2009 capex budget of $64.2 million, including $10.2 million in exploration. Details of the 2009 capex budget are shown in Table 3.
Table 2: 2009 Annual Production Forecast1
| |
Levack |
Podolsky |
2009 |
|
|
Complex |
|
Total |
| Tons |
307,000 |
372,000 |
679,000 |
| Payable Metal |
|
|
|
| Nickel (Mlbs) |
1.9 |
1.8 |
3.7 |
| Copper (Mlbs) |
6.7 |
28.5 |
35.2 |
| Platinum (ozs) |
9,700 |
12,300 |
22,000 |
| Palladium (ozs) |
15,300 |
11,300 |
26,600 |
| Gold (ozs) |
5,700 |
3,700 |
9,400 |
1Assumes a nickel price = US$4.50 per pound, copper price = US$1.50 per pound, platinum price = US$800 per ounce, palladium price = US$175 per ounce, gold price = US$750 per ounce and US$ = C$1.15.
Table 3: 2009 Capital Budget ($M)1
| |
Mining |
Exploration |
| McCreedy West |
3.8 |
- |
| Levack |
- |
0.6 |
| Podolsky |
11.3 |
3.4 |
| LFD1 |
38.9 |
5.4 |
| Other Properties/DMC |
- |
0.8 |
| Total |
54.0 |
10.2 |
1 Excludes LFD preproduction costs and credits
Implementation of the Company’s forecast capex and operating budgets and generation of expected results will potentially allow FNX to exit 2009 with a significant cash balance.
Abbreviations
| NI |
Nickel |
| Cu |
Copper |
| Pt |
Platinum |
| Pd |
Palladium |
| Au |
Gold |
| Co |
Cobalt |
| TPM |
Total Precious Metals (Pt+Pd+Au) |
| SUBX |
Sudbury Breccia |
| g/t |
Grams per tonne (31.1 grams = 1.0 troy ounce) |
| ft |
Feet or Foot |
| SIC |
Sudbury Igneous Complex |